Former Theta Labs executives file whistleblower lawsuits against CEO Mitch Liu over fraud allegations

Former senior executives of blockchain company Theta Labs have filed whistleblower lawsuits against the chief executive officer (CEO), alleging fraud and retaliatory conduct. Allegations of token price pumping, false partnership announcements, and insider trading have emerged, spreading controversy over the credibility of the Theta ecosystem as a whole.

On the 17th (local time), according to Decrypt, former Theta Labs executives Jerry Kowal and Andrea Berry each filed separate lawsuits in the Los Angeles Superior Court in California. The two allege that Theta Labs, parent company Sliver VR Technologies, and CEO Mitch Liu deceived investors over several years and retaliated against employees who raised internal concerns.

According to the complaints, CEO Liu is accused of artificially inflating token prices through misleading partnership announcements and undisclosed insider token sales. The Theta network operates based on the Theta (THETA) token, used for governance and staking, and the TFUEL token for network fees and services. The plaintiffs claim that this token structure was exploited for the CEO's personal benefit.

Mark Mermelstein, an attorney at the Holmes Ashi Cowan & Mermelstein law firm representing Kowal, said, "Mitch Liu used Theta Labs as a personal trading vehicle to commit fraud, self-dealing, and market manipulation," and added, "Through planned pump-and-dump actions he repeatedly harmed the value of investors and employees." He emphasized that the lawsuit is intended to hold him accountable.

Berry also said she witnessed and reported numerous improper acts while employed. The complaints include a plan to boost Theta token prices to enrich CEO Liu and false or exaggerated partnership announcements with prominent companies. In particular, they allege that the partnership with Google announced by Theta in 2020 was promoted as a strategic collaboration, even though it was in fact only a cloud services usage contract worth approximately $7 million.

In addition, allegations were raised that false bids were generated during the operation of some non-fungible token (NFT) marketplaces or that collaborations with celebrities were exaggerated. The plaintiffs allege that some companies introduced as external partners of Theta were actually companies owned by CEO Liu.

So far, CEO Liu and Theta Labs have not issued an official statement regarding the lawsuits. However, the lawsuits suggest that regulatory authorities and market scrutiny of partnership disclosures and token operation transparency in crypto projects could intensify.