An American technology entrepreneur feted only three years ago as the world’s youngest self-made female billionaire has been charged by the US financial authorities with “massive fraud”.
Elizabeth Holmes, the CEO and founder of Theranos, a supposedly revolutionary manufacturer of blood testing kits, was charged by the US Securities and Exchange Commission (SEC) on Wednesday with deceiving investors through “false and misleading statements” and raising $700m fraudulently.
She has settled with the agency and has been forced to pay a $500,000 penalty and to relinquish control of Theranos.
Further, she has been banned by the SEC from serving as a director of a public company for a decade,
Ms Holmes, 34, was named by Forbes in 2015 as the world’s youngest self-made female billionaire, based on the then valuation of the start-up at $9bn, and with her 50 per cent stake in Theranos giving her a net worth of $4.5bn.
The firm was subsequently rocked by allegations that the results produced by its portable blood analyser were inaccurate and relied on analysis from other testers.
Theranos’ former president, Ramesh ”Sunny” Balwani has also been charged by the SEC. Unlike Ms Holmes he has not settled and will face litigation in a California court.
“The Theranos story is an important lesson for Silicon Valley,” said Jina Choi, director of the SEC’s San Francisco office.
“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.”
Ms Holmes had claimed Theranos’ analyser could run dozens of diagnostic tests on just a single drop of blood, promising to upend the entire lucrative testing industry.
But the story began to unravel after reports by the Wall Street Journal in 2015 revealed doubts about the validity of Ms Holmes’ claims.
