US securities regulators on Wednesday charged the chief executive of the blood-testing company Theranos, Elizabeth Holmes, and a former president at the onetime soaring Silicon Valley startup with an “elaborate, years-long fraud.”
Holmes and Theranos have made a deal to settle the case against them, with the penalty including her surrendering majority voting control of the company, according to a statement by the US Securities and Exchange Commission.
Founded in 2003 by Holmes when she was only 19, the company had been seen as a rising star but came under scrutiny after The Wall Street Journal published articles questioning the reliability of its technology.
Theranos, which had touted a new way of testing that uses far less blood and delivers faster results at much lower cost than traditional methods in US labs, has been under civil and criminal investigation over its claims.
The SEC charged Holmes and former Theranos president Ramesh Balwani with raising more than $700 million by exaggerating or lying about the business and its technology.
”As a result of Holmes’ alleged fraudulent conduct, she is being stripped of control of the company she founded, is returning millions of shares to Theranos, and is barred from serving as an officer or director of a public company for 10 years,'” SEC enforcement division co-director Stephanie Avakian said in a statement.