California Crypto Company Theta Labs Accused of Inflating Katy Perry NFTs

TLDR

• Theta Labs CEO Mitch Liu is accused of manipulating the market for personal profit through fake NFT bids.
• Former employees allege Theta Labs inflated Katy Perry NFTs’ value with fake bids and celebrity partnerships.
• Theta Labs’ THETA token plummeted from over $15 in 2021 to less than 30 cents amid fraud allegations.
• Theta Labs denies the fraud claims, calling the lawsuits an attempt to damage the company’s reputation.

Theta Labs, a cryptocurrency startup based in California, is currently embroiled in legal trouble following accusations of market manipulation and fraudulent business practices. The company, which focuses on digital collectibles and NFTs, is being sued by two former executives.

Jerry Kowal and Andrea Berry, who both previously held leadership roles at Theta Labs, claim that CEO Mitch Liu orchestrated a scheme to artificially inflate the value of the company’s digital products, particularly NFTs tied to celebrity partnerships. The lawsuits, filed in Los Angeles Superior Court in December 2025, accuse Liu of using insider information and deceptive methods to benefit financially at the expense of employees, investors, and consumers.

The suits allege that Liu engaged in “pump-and-dump” schemes, where the value of Theta’s THETA token was artificially inflated before being sold off, causing significant financial losses. Kowal and Berry allege that Liu even manipulated bids on NFTs, including those related to pop star Katy Perry, to mislead consumers into overpaying. Theta Labs, however, has denied these accusations and has stated its intention to provide evidence to refute the claims.

The Katy Perry NFT Partnership and Alleged Market Manipulation

Theta Labs initially gained attention in 2021 after it secured a partnership with pop star Katy Perry to release NFTs linked to her Las Vegas residency. The deal was touted as a major milestone for the company, which was gaining traction in the booming NFT market.

 However, Kowal’s lawsuit alleges that Theta used fake bids on Perry’s NFTs to inflate demand and drive up prices artificially. The lawsuits suggest that Liu directed employees to make these inflated bids, leading to consumers paying more than the market value for the digital collectibles.

Katy Perry herself is not accused of any wrongdoing in the lawsuits, and her representatives have not yet commented on the matter. The alleged manipulation surrounding the Perry NFTs is only one example cited by Kowal and Berry, who claim that Liu used similar tactics in other ventures to boost the company’s value.

Allegations of Misleading Celebrity Partnerships

Beyond the manipulation of Perry NFTs, the lawsuits also highlight other instances where Theta allegedly misrepresented its relationships with high-profile brands and celebrities. According to Berry’s lawsuit, Theta falsely claimed to have strategic partnerships with companies like Google and even NASA to bolster its credibility and inflate the value of its THETA token.

While Theta did purchase Google Cloud products, the company misrepresented the nature of its relationship with Google as a partnership rather than a customer agreement.

These misleading claims, if true, further reinforce the accusations that Theta Labs was using deceptive practices to create an illusion of success and market legitimacy. Such actions, according to the whistleblowers, were aimed at manipulating stock prices and making the company appear more influential than it truly was.

The Decline of THETA Token and the Growing Crypto Scandal

Once valued at more than $15 in 2021, the price of Theta’s THETA token has seen a dramatic decline. As of December 2025, the token is valued at less than 30 cents, a drop of nearly 95% from its peak. This sharp decline mirrors the accusations of market manipulation and fraud against Theta Labs.

The lawsuits also highlight how Liu allegedly profited from insider knowledge by buying and selling tokens during key announcements, which caused the token’s value to spike temporarily before it crashed.

The allegations against Theta Labs come at a time when the cryptocurrency industry is facing increased scrutiny. High-profile scandals, such as the collapse of the FTX exchange and legal action against celebrities involved in crypto promotions, have led to growing concerns about fraud and regulation in the sector.

Theta Labs, like many other crypto firms, now faces the consequences of its alleged actions, with former executives seeking to hold the company accountable for its alleged market manipulation and fraudulent behavior.

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