California crypto company accused of illegally inflating Katy Perry NFTs and fraud

December 24, 2025

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Four years ago, California startup Theta Labs’ cryptocurrency was soaring, and its future appeared bright when it landed a partnership with pop star Katy Perry.

The Bay Area company had built a marketplace for digital collectibles known as nonfungible tokens, or NFTs, and had teamed up with Perry to launch NFTs tied to her Las Vegas concert residency. Its THETA token jumped by more than 500% in early 2021, reaching a peak of more than $15, making it one of the world’s most valuable cryptocurrencies. Later in the year, the spotlight shone on the company when it announced the Perry partnership.

“I can’t wait to dive in with the Theta team on all the exciting and memorable creative pieces, so my fans can own a special moment of my residency,” Perry said in a June 2021 news release.

Today, like many cryptocurrencies, THETA is 95% off its 2021 peak. It took a hit this week after former executives accused it of manipulating markets to dupe consumers into buying its products. On Tuesday, it was trading at less than 30 cents.

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 whistleblowers suing Theta Labs are Jerry Kowal, its former head of content, and Andrea Berry, previously the company’s head of business development.
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.

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