A Silicon Valley darling once worth $9bn (£6.4bn) that claimed to have revolutionised the blood test has been charged with „massive fraud“.
Theranos, its founder Elizabeth Holmes, and its former president Ramesh ‚Sunny‘ Balwani, raised more than $700m from investors through an elaborate, years-long fraud, US regulators said today.
The firm’s aim was to screen people for a wide array of diseases through a simple pin-prick blood testing system that would do away with needles.
Its rise had seemed unstoppable. Theranos attracted backing from some of America’s biggest political and business heavyweights, with Henry Kissinger joining the board.
It also agreed a big supply deal with Walgreens pharmacies, part of the US conglomerate that also owns Boots chemists in the UK.
Ms Holmes shot to prominence to become the world’s youngest self-made female billionaire, worth an estimated $4.5bn in 2015 according to Forbes.
But Theranos was quickly brought crashing to earth after a series of revelations in The Wall Street Journal questioning the blood-testing technology’s accuracy, attracting the scrutiny of America’s powerful watchdog the Securities and Exchange Commission (SEC).
The SEC found the company exaggerated or made false statements about its technology, business, and financial performance.
Theranos and Ms Holmes have agreed to settle the fraud charges against them. Ms Holmes has been banned from running a public company for a decade and will pay a $500,000 fine. She will also relinquish 18.9 million shares of stock in the company.
Mr Balwani will defend the claims made against him in federal district court.
In a statement Theranos said „neither the company nor Ms Holmes admitted or denied wrongdoing“ as part of the settlement.
The firm’s independent directors added: “The company is pleased to be bringing this matter to a close and looks forward to advancing its technology.”