To top off a disastrous chain of events for the company, the blood analysis start-up Theranos and its CEO, Elizabeth Holmes, have been accused by the SEC of defrauding investors, the agency announced today.
Holmes will relinquish control of the company's voting
To settle the charges, the SEC said, Holmes agreed to pay a $ 500,000 fine, waive majority control of the company and be barred from serving as a public company agent for a decade. The SEC has also indicted the company's former president, Ramesh "Sunny" Balwani, who has not settled the charges.
According to the SEC, Theranos raised more than $ 700 million from investors through fraudulent claims, in particular by saying that their portable blood test machine could perform complex tests with only a few drops of blood. Meanwhile, most of the tests were performed on machines built by other companies. Theranos also falsely claimed that his technology was in use by the Department of Defense, according to the SEC. In 2014, as the company claimed that it would generate $ 100 million in revenue, it finally earned close to $ 100,000, the agency said.
Theranos became Silicon Valley's favorite for his blood tests, gaining brilliant media coverage and driving Holmes to stardom. But in a series of articles that began in 2015, The Wall Street Journal cataloged the company's internal problems. Subsequently, a federal investigation was launched that led to today's announcement. The settlements are still subject to the approval of a court.