Legal pressure mounts on Nvidia as $1B lawsuit and GPU smuggling charges emerge

Nvidia and its CEO, Jensen Huang, now face a $1 billion class-action suit over 2017-2018 crypto-mining revenues. To that end, a California federal judge has certified an investor lawsuit accusing Nvidia and Huang of misleading shareholders.

According to a court document, the company’s gaming revenue during the 2017-2018 crypto mining boom leaves gaps that indicate financial fraud.

Nvidia and CEO Jensen Huang to answer for crypto revenue

US District Judge Haywood S. Gilliam Jr. issued this decision on March 25, allowing investors to bring their case as a group. At the same time, the judge emphasized that this is only a procedural matter and does not speak to whether Nvidia’s statements were fraudulent or not.

The case is very focused on the concept of “price impact,” i.e., whether the misstatement affected Nvidia’s share price. The issue began to come up after an earnings announcement on August 16, 2018. Nvidia’s shares fell 4.9% after lowering its guidance. The second drop happened on November 15, 2018, when Nvidia’s shares fell 28.5% over two days.

The court cited an internal email from one of Nvidia’s vice presidents, which was described as particularly relevant to the case. “One of Nvidia’s own executives expressed the view that its stock price remained high due to the earlier statements, and the court cannot conclude that there was no price impact in the face of such evidence,” Judge Gilliam Jr. was quoted as saying.

Nvidia is accused of understating its share of revenues derived from sales of its GPU products to crypto miners. The boom in crypto markets drove high demand for graphics cards from miners. However, Nvidia allegedly presented this as sustained gamer demand.

The filing misappropriations did not go unnoticed by the SEC. In 2022, the SEC fined Nvidia $5.5 million for failing to disclose the impact of crypto mining on its business.

Nvidia also agreed to a cease-and-desist proceeding for inadequate disclosure. The US Supreme Court in December 2024 let stand a Ninth Circuit decision that allowed the shareholder suit to proceed.

A case conference has been scheduled for April 21, during which the judge will explain the next steps.

Feds arrest trio for Nvidia GPU smuggling scheme

The United States has announced a new case involving Nvidia chip smuggling, and this case also appears to involve server manufacturer Supermicro, based in San Jose.

Just days after one of Supermicro’s co-founders was arrested, the Justice Department announced that it had charged three individuals, including a Chinese citizen from Hong Kong and two US citizens, for allegedly attempting to smuggle export-controlled Nvidia chips to China via pass-through entities in Thailand.

The 56-year-old Chinese citizen, Stanley Yi Zheng, allegedly started plotting with the two American citizens, Matthew Kelly and Tommy Shad English, about smuggling Nvidia chips to China in May 2023.

“The cutting-edge AI chips the defendants allegedly schemed to export to China represent the best of American ingenuity and years of strategic investment in maintaining our technological leadership,” said Assistant Attorney General for National Security John A. Eisenberg. “NSD is committed to protecting U.S. innovation and ensuring that those who violate U.S. export controls face serious consequences.”

Text messages obtained as a result of the investigation showed aspects of the conspiracy and also revealed that Zheng, English, and Kelly talked about “fake” corporate pleasantries to assist in completing the computer chip purchases, the value of the computer chips in China, and how to recruit others to participate in the conspiracy.

Stanley Yi Zheng, 56, from Hong Kong, China, was arrested on March 22, 2026. He made his initial appearance on March 23, 2026, before U.S. Magistrate Judge Lisa J. Cisneros of the Northern District of California. The Government has moved for Zheng to be remanded to federal custody and held without bail pending trial.

Matthew Kelly, 49, from Hopewell Junction, New York, and Tommy Shad English, 53, from Atlanta, Georgia, surrendered to federal custody on March 25, 2026. His initial appearance is to be made today in the District of New Jersey and the Northern District of Georgia.

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