Former Theta Executives Accuse Crypto Firm CEO of Fraud and Retaliation

Two former senior executives of blockchain firm Theta Labs have filed whistleblower lawsuits in California, alleging that the company and its CEO, Mitch Liu, engaged in a years-long pattern of deception, market manipulation and retaliation.

The complaints, filed separately in Los Angeles Superior Court by former executives Jerry Kowal and Andrea Berry, allege that Liu used Theta Labs and its parent company, Sliver VR Technologies, to inflate token prices through deceptive partnerships and secret insider token sales while retaliating against employees who raised concerns.

Liu and Theta Labs representatives did not immediately respond Declutter request for comment.

Theta Labs is a Delaware-based blockchain company developing the Theta Network, a decentralized platform focused on media delivery, computing and storage, including a newer hybrid cloud layer called Theta EdgeCloud, according to the company’s whitepapers and documentation.

The network uses two primary tokens: THETA for governance and staking, and TFUEL for transaction fees and network services.

The plaintiffs in the cases characterize a years-long pattern of self-dealing tied to Theta Lab’s crypto tokens and NFT marketplace.

“Pump and Dump”

“Mitch Liu used Theta Labs as his personal trading vehicle, committing fraud, self-dealing and market manipulation,” said Mark Mermelstein, one of the attorneys representing Kowal through Holmes, Athey, Cowan and Mermelstein. Declutter.

Liu’s “calculated ‘pump-and-dump’ schemes have repeatedly wiped out the value of investors and employees,” Mermelstein alleged. “This lawsuit is about demanding accountability and proving that no one is above the law.”

These actions were “committed by a tech titan and its companies against its own employees and the general public,” Kowal’s complaint reads.

Liu’s alleged schemes also included “generating bogus bids for non-fungible tokens,” some of which were tied to high-profile partnerships with celebrities like Katy Perry, according to the complaint.

Over the course of her employment with Theta, Berry, the other complainant, “heard, witnessed and reported countless instances of fraudulent conduct and self-dealing by Theta employees and executives,” according to a copy of her complaint. These cases include “schemes aimed at inflating the price of the THETA token and personally enriching Mr. Liu,” it adds.

Liu’s “primary purpose was to increase the value of the THETA token,” Berry’s complaint alleges, including through “fake or otherwise highly misleading ‘partnerships’ with high-profile companies.”

Google Partnership

Berry’s complaint also takes aim at Theta’s previous claims about Google, alleging that the crypto company publicly misrepresented a routine cloud services agreement as a strategic partnership.

Theta announced a “partnership‘ with Google in May 2020. Berry’s complaint alleges that the relationship was limited to a cloud services agreement in which Theta agreed to spend approximately $7 million on Google Cloud products, characterizing Theta as a customer rather than a strategic partner.

The complaint alleges that the characterization was used to suggest external validation and technology approval that did not exist, misleading investors and the broader community as to the nature of the relationship.

Two other instances of self-dealing were noted, where “Theta’s so-called ‘partners’ are in fact other companies founded and wholly owned by Liu,” the complaint said.