Two former executives of California-based Theta Labs have filed lawsuits alleging that CEO Mitch Liu manipulated cryptocurrency markets, including inflating prices of Katy Perry-themed NFTs. The suits claim fraudulent practices like fake bids and misleading partnerships, amid the company's cryptocurrency plummeting from its 2021 peak. Theta Labs denies the allegations, calling them attempts to secure a settlement.
Four years ago, Theta Labs, a Bay Area cryptocurrency startup, appeared poised for success after partnering with pop star Katy Perry to launch NFTs linked to her Las Vegas concert residency. The company's THETA token surged more than 500% in early 2021, peaking above $15 and becoming one of the world's most valuable cryptocurrencies. However, THETA has since fallen 95%, trading below 30 cents as of this week following the lawsuits.
The legal actions, filed in December in Los Angeles Superior Court, come from Jerry Kowal, Theta's former head of content from 2020 to 2025, and Andrea Berry, its previous head of business development. They accuse Liu of using the company for personal gain through fraud, self-dealing, and market manipulation, including 'pump-and-dump' schemes that erased employee and investor value.
Specific allegations include Liu directing fake bids on Perry's NFTs to inflate prices, leading fans to overpay. As part of the 2021 deal, Perry received $8.5 million plus warrants for licensing her image, though she faces no accusations of wrongdoing. The suits also claim Liu traded THETA tokens using insider knowledge, such as a 2020 MGM Studios licensing deal that boosted the token's market cap by over $50 million in 24 hours after announcement.
Further claims involve misleading partnerships, like portraying a Google Cloud customer relationship as a full partnership, and fake ties to NASA to pump token values. In 2022, Liu allegedly controlled 43% of a new token, TDROP, sold at its peak, causing a 90% price collapse.
"Liu used Theta Labs as his personal trading vehicle, perpetrating fraud, self-dealing, and market manipulation," said Mark Mermelstein, Kowal's attorney. Perry expressed enthusiasm in a 2021 release: "I can’t wait to dive in with the Theta team on all the exciting and memorable creative pieces, so my fans can own a special moment of my residency."
Theta Labs, Liu, and parent company Sliver VR Technologies deny the charges. "We intend to prove with evidence the fallacy of the stories being told in the lawsuits," their lawyers stated, suggesting the suits aim for a negative portrayal to force a settlement. Representatives for Perry did not immediately comment.
These cases highlight ongoing scandals in the cryptocurrency industry, following collapses like FTX and convictions of figures such as Sam Bankman-Fried, sentenced to 25 years in 2024, and Binance's Changpeng Zhao, who received a pardon from President Trump after pleading guilty to money laundering violations.
Theta Network rewards users with cryptocurrency for sharing bandwidth and computing power to improve video streaming. It uses THETA for network security and TFUEL for services.
