The SEC has charged Theranos, Elizabeth Holmes and Ramesh "Sunny" Balwani with fraud relating to the startup's fundraising activities. The company, CEO Holmes and former president Balwani are said to have raised more than $700 million from investors through "an elaborate, years-long fraud." This involved making "false statements about the company's technology, business and financial performance." Theranos and Holmes have already agreed to resolve the charges, which will involve the CEO paying a penalty and giving up effective control of the company she founded.
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The SEC's statement says that the company and the two executives misled investors about the capability of its blood testing technology. Theranos' big selling point was that its devices could scan for a number of diseases with just a single, small drop of blood, compared to the usual vials. Unfortunately, the company was never able to demonstrate that its system worked, and used traditional equipment to conduct the majority of its tests.