The controversy comes after Stylah said in his Instagram story that someone had changed the code in his initial 2019 YouTube release to make it appear as if it was free.
But, the teen producer earlier revealed to the Herald that he signed with the Sony Music-owned Columbia Records and is being paid for other uses of his song.
However, a source close to the situation claimed to Variety that Derulo, who had been negotiating separately with Stylah, didn't wait for a sign-off and went rogue before any deal was made.
"Jason wanted the beat for a record - he wanted the song to be a Jason Derulo song with Jawsh as a producer. But Jawsh should make decisions of what he wants to do with it, not be bullied by a bigger artist into putting it out," the source reportedly told Variety.
On Tik Tok, users do not need to seek permission from a music producer to use the soundtrack for a video as long as it's properly credited. But using a track and claiming it as your own is a different matter.
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"This is about giving credit where it's due," adds the insider.
"Here's a new, young artist having an explosive moment and cultural success with the work he created. He's been part of bringing a taste of New Zealand and the Polynesian siren sound to people all across the globe. Jason should either apologise or say this piece of amazing music was made by this artist."
The Herald understands Stylah is being supported by Sony Music and his management team though the process with Derulo.
Stylah earlier told the Herald he was "feeling thankful for all of the support so far".
He added that he was "focusing on all the positive things to come and getting Manurewa 67 on the map" and told his fans to "keep it loud and styla''.
When the song popped up on TikTok, it sparked a dance craze, with users around the world dancing to the song and shouting out their own culture.
Becoming known as the Culture Dance, the trend was hopped on by some of the biggest names on the platform and sees users transform mid-song into their traditional dress.
Stylah proudly represents himself on the island-themed track, with a shoutout to the Samoan dialling code and the rallying cry of "Leeshgooo" at the start of the song.
His unique sound is drawn from the craze of playing music through siren speakers carried on cars and bikes.
It's a distinctly Pasifika music - that he has taken to the world.
After its official release, Laxed (Siren Beat) entered the New Zealand Hot 20 NZ Singles chart at number four.
Globally, the song has also amassed over 6.5 million Spotify streams worldwide and over eight million views on the original YouTube video uploaded in July 2019.
In a sign of its viral appeal, the song also stormed Shazam charts worldwide, reaching Top 25 positions in 30 countries, including number two on the Global Shazam chart.