Theta Labs CEO Mitch Liu is accused of orchestrating a fraud scheme involving fake bids on Katy Perry NFTs and deceptive celebrity partnerships to manipulate markets. The THETA token crashed from a 2021 peak of more than $15 to less than 30 cents, as former executives claim Liu used insider knowledge for personal profit. Two former executives from Theta Labs sued the startup, alleging in separate lawsuits that the company and its chief executive, Mitch Liu, engaged in fraud and manipulated the cryptocurrency market for his benefit.
Liu retaliated against them after the employees refused to engage in deceptive business practices and raised concerns, the lawsuits say. Some of the alleged misconduct involved placing fake bids on Perry’s NFTs, engaging in token “pump and dump” schemes and using celebrity endorsements and “misleading” partnerships with high-profile companies such as Google to deceive the public, according to the December lawsuits filed in Los Angeles Superior Court. Perry is not accused of any wrongdoing in the suit, and Theta denies the charges.
The lawsuits against Theta Labs are the latest controversy to rattle an industry beset by scandals. In 2022, the startup launched a new token called TDROP that employees also received as part of a bonus. Liu gained control of 43% of the supply of the cryptocurrency, according to Kowal’s lawsuit.
When the TDROP token reached a high, he then sold the token, and its price collapsed by more than 90% within months. Berry’s lawsuit also alleges that Theta Labs announced “misleading” or fake partnerships with high-profile companies such as Google and entities including NASA to pump up the value of the THETA token. Theta paid for Google Cloud products but claimed it was a partner when it was a Google customer, according to the lawsuit.
The whistleblowers suing Theta Labs are Jerry Kowal, its former head of content, and Andrea Berry, previously the company’s head of business development. “Liu used Theta Labs as his personal trading vehicle, perpetrating fraud, self-dealing, and market manipulation,” said Mark Mermelstein, Kowal’s attorney, in a statement. The lawsuits are an attempt to paint the company in a negative light in hopes of securing a settlement, a lawyer for the firm said.
Kowal has sued his former employers before. In 2014, he accused Netflix of spreading false claims that he stole confidential information and Amazon of wrongful termination. The latest lawsuits allege that Liu profited from buying and selling THETA tokens using insider knowledge about partnerships with celebrities, studios and others in the entertainment industry.
“Liu’s true motive in pursuing such partnerships was not to develop a sustainable content business but to generate publicity that could be used to artificially inflate token prices for Liu’s personal gain,” Kowal’s lawsuit says. Kowal worked for Theta from 2020 to 2025. In 2020, Liu traded and sold tokens knowing that the company would close a content licensing deal with MGM Studios, according to the lawsuit.
After the deal’s announcement, THETA token’s market capitalization increased by more than $50 million in just 24 hours, the lawsuit says. When NFTs started to take off in 2021, Kowal closed deals with high-profile partners such as Perry, Fremantle Media and Resorts World Las Vegas for the startup’s NFT marketplace. As part of the deal with Perry, the singer received $8.5 million and additional warrants for the right to license her image and likeness for the NFTs.
To inflate the price and demand for these digital collectibles, Liu allegedly made bids on NFTs and directed employees to do the same. This led to people overpaying for the Perry NFTs. Multiple examples of alleged manipulation are outlined in the lawsuits.
Theta Labs is facing lawsuits alleging that Mitch Liu orchestrated fraud and market manipulation, including placing fake bids on Katy Perry NFTs and leveraging deceptive celebrity partnerships to inflate token prices. The THETA token reportedly plummeted from a 2021 peak above $15 to less than 30 cents amid these claims. Two former Theta Labs executives, Jerry Kowal and Andrea Berry, contend that Liu controlled a large portion of the token supply and used high-profile partnerships with celebrities and studios to boost THETA’s value for personal gain.
The suits also accuse the company of engaging in pump-and-dump tactics and misrepresenting partnerships with major entities such as Google and NASA to mislead investors. Theta Labs denies the charges, noting that Perry is not accused of wrongdoing and emphasizing that the lawsuits aim to pressure a settlement. The allegations add to ongoing scrutiny in an industry already strained by scandal, including past token launches and controversial partnerships.
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