Elizabeth Holmes, founder of US start-up Theranos, has been charged with fraud for deceiving investors about the firm’s blood testing technology.
The US Securities and Exchange Commission alleged that Theranos raised more than $700 million while “deceiving investors by making it appear as if Theranos had successfully developed a commercially-ready portable blood analyzer that could perform a full range of laboratory tests from a small sample of blood.”
Theranos also made false claims about its products being used by the Department of Defense, the SEC said.
Ms Holmes is being fined $500,000, will lose control of the company and is being barred from serving as an officer or director of a public company for ten years.
In 2015, Ms Holmes topped the Forbes list of “America’s Richest Self-Made Women” with a net worth of $4.5 billion – the following year Forbes revised her net worth to $0.
In 2015, the misleading efficacy of the technology was exposed by investigative reporter John Carreyrou in The Wall Street Journal. Theranos subsequently received sanctions from the Centers for Medicare & Medicaid Services (CMS), including the revocation of its CLIA certificate, and the company eventually agreed to shut down its labs and testing centers.
“The Theranos story is an important lesson for Silicon Valley,” Jina Choi, the director of the SEC’s San Francisco office, said in a statement.
“Innovators who seek to revolutionize 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.”