Theranos Fraud Holds Harsh Lessons for Crypto

    0
    90

    According to Jina Choi, the director in charge of SEC’s San Francisco office was recently quoted saying innovators who want to disrupt or revolutionize any industry, should be in a position to explain investors all the information and the truth on what the new technology is able to do. This statement was made in reference to Theranos, a blood-test firm, which was at some point a darling of the Silicon Valley. The company has been charged with fraud by SEC.

    Initial coin offerings

    You could however be forgiven for thinking the charge is about the cryptocurrency industry given the innovations and the disruption it has caused to the financial market. The much hyped fundraising done through the initial coin offerings (ICOs) for shadow projects some of which just have a vision, zero users, a buggy prototype and thousands of spectators watching and hopping it will work.

    Truth be told, a cryptocurrency is not a business of equity because it is not meant to be. It is just an open source project and not a company. In the case of Theranos, Elizabeth Holmes the founder and CEO of the company paid a fine of $500,000 and was banned from serving as a director or executive of a public company for a period of 10 years. This case has several lessons from this case which are applicable to the blockchain industry.

    Do your own research

    Google Ventures visibly declined to invest in Theranos. According to an article, which was published in Vanity Fair in 2016 Google Ventures sent its associates to Walgreens, a pharmacy company which had partnered with Theranos. The “wellness centers,” which had been established by Theranos were showcasing the company’s innovations and technologies claiming these technologies are able to test several diseases just getting a drop of blood from the tip of the finger.

    However, according to an expose by Nick Bilton, Theranos’s promise does not add up. The process actually drew much more blood than what the company indicated. It later turned out that the company was using its Edison machine in just a few of the tests which it sold to its consumers.

    LEAVE A REPLY

    Please enter your comment!
    Please enter your name here