Theranos founder accused of USD 700 mln fraud, to be fined USD 500,000

Elizabeth Holmes, the founder of Theranos, the start-up that promised to revolutionise blood testing, has agreed to settle charges that she raised over USD 700 million fraudulently from investors, according to the BBC, which quotes a decision of the Securities and Exchange Commission (SEC).

According to the SEC, the US financial regulator, Holmes will lose control of the firm and be fined USD 500,000.

“Innovators who seek to revolutionise and disrupt an industry must tell investors the truth about what their technology can do today – not just what they hope it might do someday,” said Jina Choi, director of the SEC’s San Francisco regional office.

Holmes had founded the firm in 2003 when she was 19 and by 2015 her wealth had climbed to USD 4.5 billion. By 2016 Forbes had revised its estimates of Holmes’ fortune to “nothing”. The company grew to a valuation of USD 9 billion by the summer of 2014.

In 2015, the Wall Street Journal had reported that the devices marketed by Theranos were flawed and inaccurate.

“Theranos, Holmes, and Balwani (Ramesh “Sunny” Balwani, ex-Theranos president –e.n.) claimed that Theranos’ products were deployed by the US Department of Defence on the battlefield in Afghanistan and on medevac helicopters and that the company would generate more than USD 100 million in revenue in 2014”

“In truth, Theranos’ technology was never deployed by the US Department of Defence and generated a little more than USD 100,000 in revenue from operations in 2014,” said the SEC.