Theranos CEO Elizabeth Holmes Steps Down Following Fraud Indictment

Elizabeth Holmes, the founder and CEO of blood-testing startup Theranos, will step down from her position at the discredited company that was once a Silicon Valley success. This comes alongside the news that she and Ramesh "Sunny" Balwani, the former president and COO, have been indicted by the Department of Justice on charges of wire fraud.

Federal prosecutors indicted Holmes and Balwani on nine counts of wire fraud and two counts each of conspiracy to commit wire fraud. The court stated that the pair were responsible for a corporate conspiracy that defrauded investors and customers, with one prosecutor noting that they "misled doctors and patients about the reliability of medical tests that endangered health and lives."

Theranos had a $9 billion valuation just a few years ago, before a detailed investigation by the Wall Street Journal revealed that the company knowingly misrepresented and sold unreliable technology, specifically blood test results that required only a prick of the finger. The startup is now a leading example of how deceptive Silicon Valley hype can be.

Early this year, Holmes, who now has a net worth of almost zero, settled civil charges from the SEC, which found her and Theranos guilty of "massive fraud." The company's general counsel, David Taylor, has been named the new CEO, while Holmes will keep the position of chairman. If convicted, Holmes and Balwani face a maximum prison sentence of 20 years, along with a $250,000 fine for each count of wire fraud.

SOURCE Department of Justice, Washington Post