Theta Coin’s Legal Firestorm: The Fraud Allegations Every Crypto Investor Needs to Watch

Another day, another crypto project in the regulatory crosshairs. Theta Network, the video-streaming blockchain, now faces a brewing legal battle that could rattle its foundations—and investor portfolios.

The Core Allegation: Smoke or Fire?

At the heart of the dispute are claims that Theta misled investors. The specifics are still emerging from court filings, but the language points toward classic securities fraud territory—promises of revolutionary returns that allegedly didn't match the on-chain reality. It's the kind of case that makes traditional finance guys smirk into their overpriced coffee.

Why This One Stings

Theta wasn't just another meme coin. It built a legitimate ecosystem for decentralized video delivery and had partnerships that lent it credibility. This isn't a rug pull accusation; it's a question of whether the project's growth narrative was artificially inflated. That distinction cuts deeper for long-term holders who bought the vision, not just the hype.

The Ripple Effect

Legal challenges like this never exist in a vacuum. They trigger sell-offs, spook institutional money, and invite more scrutiny from agencies watching from the sidelines. For a sector that desperately wants mainstream adoption, each lawsuit is a step back—a gift to skeptics who think the entire crypto space is just a casino with better marketing.

The Bottom Line

Watch this case closely. Its outcome won't just decide Theta's fate; it will test the legal boundaries for how crypto projects communicate with the market. In the high-stakes game of digital asset investing, sometimes the biggest risk isn't in the code—it's in the courtroom.

For a long time, the news related to lawsuits in the cryptocurrency sphere often centered around themes of “case dismissed” or “investigation closed.” However, today a significant legal action has emerged targeting one of the well-known altcoins, spearheaded by serious allegations. Unlike typical lawsuits often initiated by regulatory bodies or investors, these claims are brought forth by former employees of the company, lending considerable weight to the accusations.

Theta Coin Lawsuit

Two former employees of THETA Labs Inc. have filed a lawsuit in the California Superior Court, Los Angeles County, putting forward substantial allegations. They accuse Mitchell Liu, the CEO of Theta Labs, of engaging in speculative practices to inflate the value of cryptocurrency products. To boost the visibility of his project, Liu reportedly forged significant collaborations with major Hollywood studios and celebrities, including Katy Perry.

Such severe accusations from former internal sources could make it easier to gather further evidence and witnesses against Theta, potentially yielding unfavorable results for the company. Although Theta Coin has not experienced significant price changes thus far, the ongoing proceedings might eventually exert pressure on its price chart.

Theta Coin Developments

On the same day as the lawsuit filed, Theta Network announced its EdgeCloud upgrade. Coinciding with the legal action, the significant infrastructure enhancement offers NVIDIA H200 GPUs at the same cost as H100s. W1lliamLogan highlighted that the upgrade delivers faster AI training and inference speeds, increasing capacity and efficiency for developers and businesses leveraging the platform. With backing from enterprise validators like Sony Europe, Theta continues to advance its decentralized video streaming and edge computing infrastructure.

Thus, December 16 presented both good and bad news for Theta. The price remained almost stable throughout the day, hovering above the $0.317 support level.

During March and December 2024, Theta Coin recorded lower peaks, failing to maintain a stable price above $1.03 throughout 2025. Despite surpassing $3 last year, the altcoin saw a drop to $0.2 on October 10, levels not observed since September 2020.

Should the lawsuit begin impacting its price graph negatively, or if the market at large sees accelerated sales, Theta may test its next support point from 2020 at $0.118.