Theta Labs’ Journey: From Stardom to Scandal
Four years ago, California’s Theta Labs was on the rise, particularly after partnering with pop icon Katy Perry. The startup had established a digital collectibles marketplace through non-fungible tokens (NFTs) and collaborated with Perry for NFTs related to her Las Vegas concerts. In early 2021, the THETA token surged by over 500%, hitting a peak of more than $15, ranking it among the world’s most valuable cryptocurrencies. The partnership with Perry later amplified the company’s visibility.
Perry expressed her enthusiasm in a June 2021 press release, saying, “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.”
Fast forward to today, THETA has plummeted to about 5% of its 2021 peak value, trading at less than 30 cents. This decline was exacerbated this week by allegations from former executives accusing the company of market manipulation aimed at misleading consumers into purchasing its products.
Jerry Kowal and Andrea Berry, ex-executives of Theta Labs, filed separate lawsuits claiming fraudulent activities by the company and CEO Mitch Liu. They assert that Liu retaliated against them after they opposed unethical business practices. The lawsuits allege misconduct such as submitting fake bids on Perry’s NFTs and engaging in token “pump and dump” tactics.
Both lawsuits highlight that Theta Labs is not alone in facing scrutiny within the cryptocurrency industry. Other recent scandals involve the collapse of FTX and legal troubles for high-profile figures like Samuel Bankman-Fried. Celebrities like Kim Kardashian and Jake Paul have also been charged for failing to disclose payments for cryptocurrency promotions.
Theta Labs, which created a network that incentivized users with cryptocurrency for contributing bandwidth and computing resources, calls its platform a “blockchain-powered decentralized cloud for AI, media, and entertainment.” Its ecosystem includes two tokens: the THETA token for securing the network and TFUEL for compensating users.
Attorney Mark Mermelstein stated, “Liu used Theta Labs as his personal trading vehicle, perpetrating fraud, self-dealing, and market manipulation.” Both Theta Labs and Liu have denied the allegations, claiming the lawsuits are attempts to discredit the company and force a settlement. Meanwhile, the legal battles are bringing to light serious concerns regarding insider trading and marketing manipulations related to celebrity partnerships.
