The complete Scandal Story: Theranos & Elizabeth Holmes || Elizabeth Holmes and Theranos Scandal


Elizabeth Holmes founded the health technology company Theranos in 2003. This private medical technology business initially marketed as a cutting-edge technological firm, stating that their compact automatic gadget, known as the Edison, could run blood tests very rapidly and more importantly required a small amount of blood.

Elizabeth Anne Holmes, the company’s founder was born in Washington D.C.. Holmes attended Houston’s St. John’s school. In high school she had a passion for computer programming.

Elizabeth’s initial venture was the sale of compliers, which are computer programmes. Holmes worked as a lab assistant and a student researcher while attending Stanford University to study Chemical Engineering. She also submitted the initial patent application for a skin-patch for portable drug control in 2003.


The originator, Elizabeth, was genius at persuading people to accept her plan. She was able to raise such a sizable sum of money from various investors and venture capitalists despite not having finished product. Theranos raised $6.9 million as a seed investment, valuing the business at $30 million in 2004, the same year the founder left college. The company thereafter continued to get funding, which reached to be valued at $1billion in 2010. As a result of the company’s high valuation, it was announced to the world via various news outlets and media. The business later received investment and was valued at $9 billion, making founder Elizabeth a billionaire. She then began to receive increasingly more attention, as does the business.

Elizabeth has thus signed a non-disclosure agreement with employees, investors and everyone associated with the business in order to prevent the leak of the secrets. Yes, it is acceptable to hold business secrets, but these secrets were indirectly violating the law, professional standards, and social morals. It was discovered that the company’s technology was ineffective. Test kits and equipment from other firms were used to conduct all the tests conventionally that were intended to be performed using their own technology.

So an article in The Wall Street Journal released news based on interviews with former employees and according to that the technology Elizabeth had been describing to all investors and clients turned out to be a fraud.

Legal Concerns

Investor’s Perspective in the Civil Case

People who had invested in Theranos accused of lying about the technologies they are creating. The Edison device could do 200 tests with just a few drops of blood. This assertion was found to be untrue because Edison was unable to perform even 50 tests accurately. Because the firm kept the information from investors under the guise of a company secret, they continued to make millions of dollars in false claims.

Allegations of Civil fraud (From Security and Exchange Commission)

The security and Exchange Commission (SEC), a free standing US government entity, brought that organisation keeps an eye on investors, safeguarding them and preserving fair procedures in the financial markets. In order to protect the financial market and investors, it is both the obligation and responsibility of the SEC to file this fraud allegation for misleading with wrong product data.

9 Wire frauds and 2 wire fraud conspiracy cases (From Federal Grand Jury)

Federal Grand Juries are groups of people that carry out legal tasks and decide which criminal offences should result in criminal charges. This problem was brought up because Elizabeth Holmes, The Company’s founder and Balwani, its COO, “engaged in a multi-million dollar scheme to defraud investors and a separate scheme to defraud doctors and patients”.

Immediate risk to the health and safety of patients (From Walgreens and CMS)

Theranos’ lab was determined by the Centre for Medicare & Medicaid Services to be in violation of both its performance criteria and certification requirements. Thus, the American pharmacy chain Walgreens declared that it would stop conducting its testing within Theranos wellness centres. They resolved this issue by paying fines and exiting the blood testing industry.

Social Problems

Although CEO Elizabeth Holmes and COO Sunny Balwani were aware that their blood testing system could not perform as declared they chose to keep this information from its clients, board members, investors and media. Because they continue to hide under the guise of maintaining company secrets as they receive increasing amounts of investment and company valuation. Theranos affected the entire society by withholding secrets from investors and giving false hope to people.

Fake demonstrations of newly discovered technology and made it appear by naming it as minilabs, worked in order to make it accessible to the general public. Although Theranos used its own equipment in the field, other devices from other suppliers were used to conduct blood testing. As a result, this has evolved into a social problem because it has led to laboratories and individuals using Theranos devices in the belief that they are reliable and accurate.

Many laboratories employed the Theranos’ Edison device, which allowed patients to have their blood testing using it. As advertised, it was relatively cheaper and faster, which is why so many people used it. However, patients were unaware of the flaws in the results it was providing. Hence, it demonstrated that persons with disease believed they have no disease in their body and vice-versa.

Elizabeth, the originator, was a young woman who enjoyed great success. Numerous media outlets and news agencies have written about her accomplishments and desire to transform the world. People had begun to refer her as the medical industry’s successor to Steve Jobs. Therefore, a lot of people were inspired by her and followed her path as a result of her celebrity. But once the scandals and frauds were widely known, all of this faith was destroyed.

Moral Issues

The company only ever considered itself, i.e. increasing funding, valuation, media attention, and fame and never considered investors funding the company, board members, employee’s careers, patients using their defective technologies, or potentially life-or-death situations brought on by inaccurate results. Therefore, Theranos never tried to help additional people; instead, it focused on benefiting the CEO and COO alone. As a result of the corporation deviating from utilitarianism, ethical issues have emerged.

The actions themselves should determine whether they are right or wrong, not their outcomes. Board members are supposed to be aware of the company’s trade secrets, however with Theranos Company, the truth is being kept from the board and its investors.

Instead of focusing on what was right or wrong, the organisation should have done the right thing in the right way. They simply keep withholding company information from the general public and even investors, which is not honourable. When the article was published, the corporation should have apologised, but instead they decided to sue the publisher. As a result of these activities, the company’s character appeared to be lacking.

Owners of the company collectively called its stakeholders. Therefore, they have the right to request and obtain any information about the business and its leadership at any time. But in the case of Thranos, this right has been in fingered. As a result, there is an ethical problem because the firm is violating the rights of the true owners.

Professional Concerns

Despite the fact that Theranos’ product was inaccurate and flawed; people were convinced of the effectiveness of their goods and the results by numerous commercials and marketing efforts. Therefore, it is improper from a professional standpoint to advertise a product that the general public cannot use. As a result, it had the opposite effect on society and human welfare.

It was discovered from the former Theranos employees that the corporate culture was incredibly unjust. People are unable to communicate with one another in the office due to the design of the room to discuss the problematic technologies being used. If someone tried to approach the CEO about issues with the machines, he would either be ignored or fired immediately. Therefore, it is a professional issue and the corporation has a history of forcing employees to leave by simply ignoring them and ceasing to pay attention to their requests.

Each employee in the organisation used to be constantly observed, preventing any opportunity for independent work. Theranos’ legal department pursued departing employees and threatened to file lawsuits against them. Therefore, it was unethical for the staff to act in this way, and Theranos has a professional problem.

Elizabeth was dishonest with the public and in interviews despite being the CEO of Theranos. After reading the charges made in the Wall Street Journal article, she was not prepared to embrace the murky secrets of the business. Therefore, it is improper to promote the goods through lying.

Theranos had a deal to introduce its blood testing services to Walgreens by the first of February 2013; however it missed the deadline as it was not ready. It demonstrates the company’s lack of professionalism and punctuality. Elizabeth and COO Ramesh Balwani agreed to debut with an older device called Edison in order to defraud Walgreens. Therefore, a company’s decision to lie or disobey a contract between companies is a professional concern.


We can conclude that Elizabeth Holmes’ exaggerated confidence and boast caused the crisis. She ought to have begun by learning the basics of the specific area of medicine that she was about to enter. She ought to have started performing blood tests with tiny kits. After that, investors poured large sum of money into the controversy without any actual product or market research. The error was then committed again when the business fired employees for criticising a defective Theranos’ product. Those workers ought to have been hired to improve the product rather than fired. There were numerous opportunities to minimise errors and recover the business. However, as a result of Elizabeth Holmes’ individuality and poor management, the company went out of business, losing millions of dollars in investment.


1. Elizabeth was unable to create the technology to conduct 200 or more tests, but a small number of tests were being conducted using their technology. They need to have concentrated on creating those few dozen tests to provide 100% accuracy rather than focusing on 200 tests.

2. Elizabeth’s actions led to the company becoming a scam when their technology failed to pass all of the tests; rather than misleading investors and pretending that the technology could pass all of the tests, she ought to have stopped marketing a faulty product and instead creating and marketing small, highly accurate products.

3. Instead of dismissing workers who complain about flaws in the product being developed, the corporation ought to have engaged them in dialogue and collaboration to improve machine. So that nobody would leave the company, the product would eventually be upgraded and this scandal would never have been made public.

4. The corporation should have apologised for its error and made a money-back guarantee to investors, not run away from the media once it revealed their dark secret to prevent them from filing a lawsuit against the firm.

Frequently Asked Questions:

Why couldn’t Theranos work?

There was a serious technical issue in the testing device and the CEO Elizabeth Holmes tried to hide the sore with false promises and skilled presentation.

Did Theranos machine ever work?

The Edison machine of Theranos could perform very few tests instead of as promised to do nearly 200 tests with an ounce of blood. Its accuracy was always under question mark.

What is the relationship between Elizabeth Holmes and Sunny Balwani?

Sunny was Holmes’ boyfriend and the COO of her start-up.

What did Theranos do that was so bad?

They cheated investors, patients and employees by stating false promises under the shadow of media and publicity.

Why was Theranos unethical?

When Holmes gave investors misleading information and fraudulent demonstrations of the medical testing gadget to entice them to invest in her business, she violated the moral principles of truthfulness and integrity.

Thanks for reading our article. Hope it was a good experience.

Plaban Nayak

Leave a comment