Ex-employees sue Theta Labs alleging CEO-driven fraud as Theta unveils EdgeCloud with NVIDIA H200
Two former Theta Labs employees filed a fraud lawsuit in Los Angeles Superior Court alleging CEO Mitchell Liu orchestrated speculative actions to inflate the value and visibility of Theta-related products, including reported high-profile partnerships with Hollywood studios and celebrities such as Katy Perry. Plaintiffs say the conduct could draw more witnesses and increase legal pressure on Theta Labs, escalating reputation and regulatory risk. The filing coincided with Theta announcing its EdgeCloud infrastructure upgrade featuring NVIDIA H200 GPUs (141 GB VRAM) offered at H100 pricing and claiming 2.5x faster AI training and inference. Theta said the upgrade is supported by enterprise validators, including Sony Europe. Market reaction has been muted so far: THETA traded near $0.317 on the day, well below 2024–2025 peaks around $1.03 and far under prior highs near $3. Analysts warn that intensified legal fallout or sustained selling could push THETA toward longer-term supports near $0.118 (levels last seen in 2020). Traders should monitor court filings, on-chain flows, exchange order books and news momentum, while watching for short-term volatility that could produce trading opportunities or deeper drawdowns.
Bearish
The combined news mixes material legal risk with a product/tech announcement. Fraud allegations against CEO Mitchell Liu increase reputational and regulatory uncertainty — factors that typically pressure token sentiment and can trigger selling. Although EdgeCloud and H200 support are constructive fundamentals, market reaction was muted and does not offset immediate legal risk. Short-term: expect elevated volatility and potential downside as traders react to court filings, headlines and on-chain outflows. Liquidity events or accelerating sell pressure could push THETA toward the cited longer-term support near $0.118. Long-term: the upgrade improves infrastructure credibility and could support recovery if legal issues are resolved favorably, but outcome and timing are uncertain. Therefore, net price impact on THETA is likely negative until legal clarity reduces uncertainty. Traders should watch court developments, exchange order books, large wallet movements, and validator/institutional statements for directional cues.