Whistleblower Storm Exposes Alleged Deception at Blockchain Giant Theta Labs

Two former Theta Labs executives have ignited a legal firestorm in California, accusing the blockchain company’s leadership of orchestrating a complex scheme of market manipulation, token misrepresentation, and internal retaliation that they claim spanned years.

Whistleblower Lawsuits Shake Theta’s Foundations

Former senior executives Jerry Kowal and Andrea Berry have each filed separate whistleblower lawsuits in Los Angeles Superior Court, alleging that Theta Labs—and its CEO, Mitch Liu—misled investors, fabricated partnerships, and manipulated token prices to artificially inflate the value of THETA and TFUEL, the company’s primary digital assets. Both lawsuits describe what they call a pattern of “self-dealing” and fraudulent activity entwined with Theta’s blockchain recruitment and NFT operations.

The filings allege that Liu and related entities, including parent company Sliver VR Technologies, leveraged the platform and employee positions for personal gain while retaliating against staff who questioned internal practices. While Theta Labs and its chief executive have yet to issue a public response, the claims threaten to expose deep fissures within one of the blockchain industry’s best-known media-delivery networks.

A Blockchain Powerhouse Under Scrutiny

Founded in Delaware, Theta Labs built a decentralised infrastructure designed for video streaming, edge computing, and data storage. Its ecosystem relies on THETA tokens for governance and staking, while TFUEL serves as the network’s operational fuel for transactions and smart contract execution. The company’s newer infrastructure venture, Theta EdgeCloud, was marketed as a Web3 hybrid cloud layer aimed at bridging decentralised and centralised computing models—a growing area in blockchain development increasingly being supported by advanced web3 recruitment efforts across the UK and US.

The allegations against Theta cast a damaging light on what had been positioned as a cutting-edge blockchain enterprise, potentially influencing confidence levels in the sector’s transparency and governance standards. It also reflects a broader shift in the digital asset space where accountability and regulatory alignment are becoming central to venture success and crypto recruitment strategies.

“Pump-and-Dump” Accusations Rock the Core

Attorney Mark Mermelstein, representing Kowal through Holmes, Athey, Cowan & Mermelstein, described Liu’s alleged activities as “calculated pump-and-dump schemes” that “repeatedly wiped out investor and employee value.” He added, “This case is about demanding accountability and proving that no one in crypto sits above the law.”

Kowal’s complaint alleges that Liu utilised Theta Labs as “a personal trading vehicle,” exploiting both internal and public-facing operations to generate artificial market movements. According to court filings, this entailed the creation of false bids for non-fungible tokens (NFTs) and promotional efforts involving high-profile partnerships that exaggerated Theta’s influence in the emerging entertainment-token economy. Some of these partnerships allegedly involved celebrities, including singer Katy Perry, whose association with Theta’s marketplace was publicly touted as a major Web3 breakthrough.

Andrea Berry’s Allegations: False Partnerships and Internal Pressure

Andrea Berry, a respected figure in the media technology sector, alleged that during her tenure at Theta she “learned of, witnessed, and reported numerous instances of fraudulent conduct and self-dealing” by senior management and executives. Her complaint centres on claims that these schemes were deliberately orchestrated to bolster the THETA token’s value and that high-ranking individuals personally profited from insider sales while promoting “grossly misleading partnerships.”

Among the most serious of Berry’s claims is that Theta Labs routinely fabricated relationships with well-known corporations to imply strategic cooperation or endorsement. In particular, Berry accused Theta of exaggerating its 2020 announcement of a “partnership” with Google. According to her filing, the affiliation was no more than a $7 million cloud services contract—a standard commercial arrangement positioning Theta as a client of Google Cloud, not a partner.

The complaint asserts that this misleading portrayal was used to signal investor legitimacy and technological endorsement from a global giant, giving the illusion of strategic trust and validation in the eyes of the blockchain community. For stakeholders and industry observers, these revelations raise difficult questions about marketing ethics and the due diligence required when evaluating collaboration announcements in the decentralised sphere.

Fabricated “Partners” and Web3’s Credibility Crisis

Beyond Google, Berry alleges that at least two other companies publicly described as Theta “partners” were in fact businesses created and fully owned by Liu. Such allegations, if proven, add a layer of complexity to the ongoing discourse around Web3 transparency—a crucial factor that determines trust among investors, clients, and even web3 talent acquisition professionals seeking credible blockchain employers.

The gravity of these claims mirrors similar controversies that have impacted the blockchain industry in recent years, where opaque corporate structures and exaggerated investment claims led to substantial losses and a surge in demand for legal, compliance, and risk management roles. As shown in related cases such as CoinDCX’s social engineering breach and the Great Cryptocurrency Liquidation Catastrophe, the repercussions of insufficient oversight can reverberate across markets and career pipelines alike.

Implications for Blockchain Governance and Hiring Standards

The lawsuits not only threaten Theta’s reputation but also serve as a case study for how decentralised organisations handle internal dissent. Whistleblower accounts of retaliation suggest deeper governance issues—an area gaining heightened attention among blockchain recruiters and compliance officers. These cases underscore why blockchain recruitment agencies increasingly prioritise candidates with dual competence in technology and ethics, blending engineering expertise with regulatory fluency.

In an industry grappling with credibility gaps, senior roles such as crypto compliance officers, blockchain legal advisors, and Web3 governance specialists are seeing rapid demand spikes. The Theta case could become a benchmark example driving further transformation in how blockchain headhunters and enterprise hiring strategists assess leadership integrity before placement.

The Broader Picture: Trust as the New Currency

As decentralised ecosystems expand, the balance between innovation and accountability remains fragile. Cases like Theta’s spotlight the difficulty of verifying marketing claims in a space dominated by technical jargon, token economies, and celebrity partnerships. The potential misuse of such narratives not only damages investor confidence but can directly affect the trajectory of crypto talent entering the industry, who increasingly seek employers that align with transparent and sustainable governance standards.

Across the Web3 employment spectrum, professionals are now re-evaluating the weight of ethical integrity when choosing projects or organisations to join. For web3 recruitment agencies such as Spectrum Search, the Theta allegations reinforce an ongoing truth: in blockchain, trust isn’t just a marketing promise—it’s the backbone of every transaction, career, and community built upon it.