Feds begin criminal investigation against Theranos

Probes against the California startup keep piling up.

In a letter addressed to its partners, the once-promising blood test startup Theranos has admitted that it's under criminal investigation. According to multiple sources, the US Securities and Exchange Commission and the US Attorney's Office for the Northern District of California have started looking into whether the firm misled its investors about the state of its technology. The prosecutors even subpoenaed Walgreens, which offers the company's blood tests, and the New York State Department of Health within these past weeks. They asked both organizations for testimony on how Theranos described its tech to them, as well as for any document the company submitted. The Wall Street Journal says the criminal investigation's still in its very early stages, and it doesn't automatically mean the company will be indicted.

Theranos promised lab test results with just a tiny amount of blood collected in minuscule vials called "nanotainers." It raised $700 million and was valued at $9 billion before The WSJ published a piece revealing problems with its proprietary technology's accuracy. Since then, it's been under constant scrutiny from various agencies, including the State Departments of Health in Pennsylvania and Arizona, The Centers for Medicare and Medicaid (CMS) and the US Food and Drug Administration (FDA).

The FDA spotted issues with its nanotainers and quality control procedures when it inspected the company's labs in 2015. More recently, reports said the CMS found out that Theranos knew it was sending faulty test results to customers. The agency reportedly wants to ban company founder Elizabeth Holmes and president Sunny Balwani from the blood testing industry for at least two years.

Holmes hopes to save her company from total destruction, though, as evidenced by this part of the letter obtained by Business Insider:

"The company continues to work closely with regulators and is cooperating fully with all investigations.

We welcome further review of our technologies, performance, and data, which is why we voluntarily engaged with FDA years ago. We recently hosted three scientific review sessions in Palo Alto with leading laboratory and medical experts, many of whom joined our Scientific and Medical Advisory Board as a result, and are now working with us to introduce our technologies through peer reviewed publications."