Theta Labs Faces Fraud Lawsuits From Former Executives

• Former Theta Labs executives Jerry Kowal and Andrea Berry filed fraud lawsuits.
• Complaints allege the CEO orchestrated pump-and-dump schemes for THETA tokens.
• Lawsuits claim false celebrity partnerships used to inflate THETA token prices.

Two former senior executives at Theta Labs filed whistleblower lawsuits in California alleging the blockchain company and CEO Mitch Liu engaged in market manipulation and fraud. The complaints were filed separately in Los Angeles Superior Court by former executives Jerry Kowal and Andrea Berry.

The lawsuits allege that Liu used Theta Labs and its parent company, Sliver VR Technologies, to inflate token prices through misleading partnerships and undisclosed insider token sales. The complaints also claim the company retaliated against employees who raised concerns about these practices.

CEO Accused of Using Company as Trading Vehicle

Mark Mermelstein, attorney representing Kowal, stated that Liu used Theta Labs as his personal trading vehicle. The attorney alleged that calculated pump-and-dump schemes repeatedly eliminated value for investors and employees.

Theta Labs operates as a Delaware-incorporated blockchain company developing the Theta Network, a decentralized platform focused on media delivery, computing, and storage. The network has two major tokens. One is THETA, which is used for governance and staking, and TFUEL, which is used for transaction fees and network services.

The complaints filed Tuesday characterize a years-long pattern of self-dealing tied to Theta Lab’s crypto tokens and NFT marketplace. Kowal’s complaint states that a corporate tech titan committed actions against employees and the public.

Allegations Include False NFT Bids

Liu’s alleged schemes included generating false bids for non-fungible tokens, with some linked to high-profile partnerships with celebrities, including pop star Katy Perry. The complaints allege Liu aggressively sought partnerships with major Hollywood studios and celebrities to increase publicity.

Berry’s complaint states that during her employment at Theta, she learned of, witnessed, and reported numerous instances of fraudulent conduct and self-dealing by company employees and executives. These instances included schemes to inflate the price of the THETA token and to enrich Liu personally.

The lawsuit alleges that Liu’s primary goal was to inflate the value of the THETA token through fake or highly misleading partnerships with high-profile companies. The complaints claim these partnerships were used to create market excitement and drive token prices higher while Liu allegedly sold holdings.

Both former executives allege retaliation after raising concerns internally about the practices. The lawsuits seek damages and accountability for the alleged market manipulation schemes that affected investors and employees holding THETA tokens.

Related: Reddit Sunsets Digital Collectibles, Users Must Export Keys