Theta Faces Mounting Legal Scrutiny as Fresh Allegations Surface

Another day, another crypto project in the regulatory crosshairs.

Theta Network, the decentralized video delivery platform, finds itself navigating choppy legal waters as new allegations emerge. The project that promised to revolutionize streaming now faces questions that could reshape its trajectory.

The Core of the Controversy

Details remain under wraps, but the nature of the allegations points toward familiar territory for blockchain ventures: securities classification and compliance. Regulators globally are sharpening their focus, and no project—no matter how innovative its tech—is immune from scrutiny. It's the classic dance of disruptive technology meeting established legal frameworks.

Market Resilience or Complacency?

Interestingly, the token's price hasn't cratered—at least not yet. This disconnect between legal headlines and market performance is a peculiar crypto phenomenon. Some see it as resilience; others call it willful ignorance from a market that's seen it all before and has the attention span of a goldfish on espresso. Remember, in crypto, bad news is often just 'content' until a court ruling makes it a liability.

A Stress Test for Decentralization

This situation serves as a real-time stress test for Theta's decentralized governance claims. How the foundation and community respond—with transparency or obfuscation—will be telling. Legal challenges have a way of separating projects built on substance from those built on hype. The path forward requires more than just clever code; it demands legal savvy and principled leadership.

For now, the industry watches and waits. Another case study in the making, proving that in the world of digital assets, the most formidable firewalls aren't always the technological ones.

For a long time, reports regarding legal issues related to cryptocurrencies were centered on cases being dismissed or investigations closing without further action. Today, however, a new fraud case has been filed against a notable altcoin, bringing fresh allegations to light. This case is particularly significant as it has been initiated by former employees of the company involved, who have presented substantial claims.

Theta Coin Lawsuit

Two former employees of Theta Labs Inc. have made critical allegations in a lawsuit filed today at the California Superior Court, Los Angeles County. According to them, Mitchell Liu, who has been the CEO of Theta Labs for several years, has been involved in speculative activities aimed at increasing the value of cryptocurrency products. To elevate the project’s visibility, Liu engaged in significant collaborations with major Hollywood studios and celebrities, including Katy Perry.

The fact that these serious allegations are coming from former employees might mean that THETA could face difficulties due to the potential for more witnesses to come forward in the case. Although Theta Coin has not experienced significant price movement yet, the ongoing developments might exert pressure on its price chart.

Theta Coin Developments

On the same day as the lawsuit, the team announced the Theta Network’s EdgeCloud upgrade. This critical infrastructure enhancement coincided with the release, offering Nvidia H200 GPUs at the same price as the H100. William Logan stated, “The EdgeCloud upgrade provides 141 GB VRAM with 2.5 times faster AI training and inference speeds. This development boosts capacity and efficiency for developers and businesses utilizing the platform. With support from enterprise validators like Sony Europe, Theta continues to advance decentralized video streaming and edge computing infrastructure.”

Thus, December 16 brings both good and bad news for Theta. Analyzing the chart, the price remained almost stable above the $0.317 support throughout the day.

Theta Coin, which marked lower peaks in March and December 2024, failed to maintain levels above $1.03 throughout 2025. Despite its previous peaks over $3, the altcoin saw $0.2 during the October 10 market drop, levels last seen in September 2020.

If the lawsuit begins to negatively impact the charts or if there’s an accelerated sell-off in the market, the next support level of $0.118 from 2020 may be tested.