Where does the “Theta is a scam” claim actually come from?

The question “is Theta a scam?” lands differently in 2026 than it would have two years earlier.

Before December 2025, the scam accusation was largely the background noise of crypto skepticism – the token had collapsed 99% from its 2021 high, retail investors who bought at the peak had taken severe losses, and the usual complaints about hype cycles and unfulfilled roadmap promises circulated on Reddit and crypto forums.

That kind of skepticism is standard for any major token that has experienced a steep decline.

What changed in December 2025 was specific and material. Two former senior Theta Labs executives – Jerry Kowal and Andrea Berry – filed separate whistleblower lawsuits in Los Angeles Superior Court naming Theta Labs, parent company Sliver VR Technologies, and CEO Mitch Liu as defendants. These are not anonymous forum posts.

They are named individuals with direct operational knowledge of the company, making specific factual allegations in sworn court filings. Their attorneys have described CEO Mitch Liu as having used “Theta Labs as his personal trading vehicle, perpetrating fraud, self-dealing, and market manipulation.”

The allegations include insider pump-and-dump schemes on THETA and TFUEL tokens, misrepresentation of the Google and Sony partnerships to inflate token prices, fabricated NFT bids linked to celebrity collaborations, and retaliation against employees who raised concerns.

Theta Labs has denied all claims. No court has ruled on any allegation. Both points matter equally – the allegations deserve serious weight because of who is making them, and the denials deserve fair acknowledgment because courts, not press coverage, determine facts. This review holds both simultaneously and works through what is actually known.

What exactly do the whistleblower lawsuits allege?

The specificity of the allegations in the Kowal and Berry lawsuits is what separates them from ordinary crypto skepticism. A review of coverage from Decrypt – which reviewed the court filings directly – and other outlets that reported on the complaints identifies four distinct categories of alleged misconduct.

Pump-and-dump schemes on THETA and TFUEL. The complaints allege that CEO Mitch Liu executed multiple coordinated schemes to artificially inflate THETA and TFUEL token prices, with insiders selling into the inflated prices before values declined – a practice that transfers wealth from retail buyers to insiders at the expense of retail holders.

These are the most serious category of allegation because, if proven, they would constitute securities fraud against retail token buyers.

Misrepresented partnership announcements. The lawsuits allege that the scope and nature of Theta’s high-profile partnerships – including those with Google and Sony – were deliberately misrepresented to create market excitement and drive token prices higher.

The April 2021 announcements of Google and Sony Europe joining as enterprise validators coincided directly with THETA reaching its $15.90 all-time high. The lawsuits allege this timing was not coincidental and that the actual terms of the relationships were materially different from what was communicated publicly.

Fraudulent NFT bidding. The complaints allege that fraudulent bids were created on NFTs linked to high-profile celebrity collaborations – including projects connected to pop star Katy Perry – to inflate sale prices. This would constitute marketplace fraud targeting buyers who believed they were participating in legitimate auctions.

Employee retaliation. Both Berry and Kowal allege that employees who raised concerns about these practices internally were retaliated against, creating what the filings describe as a culture of fear that suppressed internal accountability. Berry’s complaint states she was aware of and reported extensive misconduct and faced consequences for doing so.

It is equally important to state clearly what the lawsuits do not establish. The allegations are not findings of fact. No court has ruled that any of the described conduct occurred. Theta Labs has denied everything.

In the US legal system, civil allegations filed by private parties must survive motions to dismiss, proceed through discovery, and ultimately be proven by evidence – a process that can take years. The cases are ongoing as of mid-2026. Any honest assessment of Theta in 2026 must hold the seriousness of the allegations and the absence of a court ruling simultaneously.

Is the 99% price collapse evidence of a scam?

THETA’s price trajectory is the most visible element of the scam accusation for retail investors. The token hit approximately $15.90 in April 2021 and traded at around $0.15 to $0.40 in early 2026 – a decline of 97 to 99% from its peak. For anyone who bought at or near that high, the loss is almost total. The question is what that trajectory actually means about the nature of the project.

There are two competing explanations for the price collapse, and the honest answer is that both are partially true. The first is market-cycle correction: virtually every major token that peaked in 2021 fell 80 to 95% in the subsequent years.

Ethereum, Solana, Avalanche, and most comparable Layer-1 tokens experienced similar percentage declines from their cycle highs. In that context, THETA’s fall – while severe – is not categorically unusual for the 2021-2026 period.

The second explanation – unique to Theta – is the one the lawsuits raise: that the 2021 peak itself may have been artificially inflated through misrepresented announcements, meaning the starting point of the decline was elevated by alleged manipulation.

If the lawsuits prove that assertion, then retail investors who bought into the 2021 THETA rally based on the Google and Sony partnership narratives were not simply caught in a market cycle – they were buying into a price that had been engineered through misrepresentation. That would be qualitatively different from a market correction, and it is the core of why “is Theta a scam?” is a more serious question in 2026 than it was in 2024.

Who actually lost money – and how?

Understanding who the real victims of Theta’s price collapse are – and how they lost money – is essential to answering the scam question honestly. The answer is not uniform across all user types.

The contrast between these two experiences is the most important frame for the scam question. Daniel represents the population most likely to have been harmed by the specific conduct alleged in the lawsuits – retail buyers who made purchasing decisions based on partnership announcements that the lawsuits claim were misrepresented.

Yuki represents the population for whom Theta is primarily an infrastructure platform rather than a speculative token, and whose assessment of the project centers on whether the product works rather than whether the 2021 price was manipulated. Whether Theta “is a scam” depends substantially on which of those two relationships you have with the project.

How does Theta compare to Render Network – its closest competitor?

Render Network is the most direct competitor to Theta EdgeCloud in the decentralized GPU compute space. Comparing the two is useful for calibrating the scam question: it shows what a comparable project without active governance litigation looks like in the same market, and it surfaces the genuine product differentiators that make Theta’s infrastructure layer independently valuable regardless of the legal outcome.

The comparison cuts in both directions. Theta’s enterprise validator roster – Google, Samsung, Sony, Deutsche Telekom – is a genuine differentiator that Render does not match. A company that stakes real capital to run a validator node has a stronger commitment to the network than a logo partnership. But Render does not have two whistleblower lawsuits alleging that its CEO used the company as a personal trading vehicle.

For investors who want to be in the decentralized compute sector without the legal overhang, Render is the most natural alternative to evaluate. For investors who believe the Theta product merits outweigh the governance risk, the validator roster represents real value that alternatives do not replicate.

Is Theta a scam – the honest verdict

The honest answer requires distinguishing between two different things people mean when they ask the question.

If “is Theta a scam” means “is this a non-existent project designed to take money and disappear” – no. Theta Network has been live since 2019. It has a functioning blockchain, a real GPU compute marketplace with paying institutional users, and an enterprise validator council that includes some of the world’s largest technology companies committing real capital on-chain.

Those things are independently verifiable. They do not disappear based on a court ruling.

If “is Theta a scam” means “was I misled into buying this token based on information that was deliberately engineered to be false” – that is precisely what two former senior executives have alleged in court, and precisely what Theta Labs denies. The answer to that question will be determined by a California court, not by a product review.

What can be said now is that the allegations come from credible sources, describe specific and legally significant conduct, and have not been dismissed. The legal process is the appropriate mechanism to resolve them, and no one outside that process – including this article – can honestly tell you the outcome in advance.

What sits between those two answers is the amber verdict: a real product with real governance uncertainty, where the product and the governance question must be assessed separately and held simultaneously until the lawsuits resolve.

Which type of user should still consider Theta – and which should not?