Blood testing company Theranos is now being investigated by federal prosecutors. The company is alleged of misleading its investors regarding the capability of its company and its technology.
The US attorney's office for the Northern District of California has sent subpoenas to several investors of the company. The attorney's office is trying to get information regarding the group's representation on its blood testing technology and the accuracy it delivers.
Elizabeth Holmes, a Stanford dropout, founded Theranos and is considered the youngest female billionaire. Her company achieved $9 billion valuations on it most recent funding in 2014. The company partnered with Walgreen, a drugstore chain that took an equity stake as part of its tie-up. The said drugstore also received subpoenas as per Financial Times.
According to Bloomberg, Theranos has been closely working with regulators and is cooperating in the investigation. Several government agencies like Center for Medicare and Medicaid Services and other state health providers in California have also joined the probe. The US Securities and Exchange Commission also started an investigation on whether Theranos really did mislead its investors.
However, as reported by Fox Business, the separate investigation of the department of health in Pennsylvania and Arizona including the Food and Drug Administration has been closed successfully.
Theranos has been facing legal problems right after the company fell from its high position in Silicon Valley. Questions regarding the effectiveness of its technology have surfaced. Reports say that its product is overhyped and its scientist is not sufficiently qualified.
Over the years, the company has been claiming that it can produce accurate test results from just a few drops of blood deposited in a tiny vial known as nanotainer which makes painful needles and old vials a thing of the past. However, the company decided to suspend the use of the nanotainer and is now running its test on materials commonly used on other labs.
CMS regulators are now proposing a ban on Holmes on the blood testing industry for two years after investigators found out that the company in California placed its patient's life on the line.
