The SEC said Theranos deceived investors by "hosting misleading technology demonstrations, and overstating the extent of Theranos' relationships with commercial partners," noting that at times Theranos' technology performed could only do about 12 tests of the over 200 tests advertised. The SEC also said former Theranos President Ramesh "Sunny" Balwani and Holmes lied about the extent of Theranos' involvement with the military.
Balwani worked at Theranos from 2009 to 2016, after extending credit to his then-girlfriend Holmes. The pair collaborated closely, the SEC said, with Holmes working on innovation, strategic relationships and the board, while Balwani concentrated on technology and human resources. The SEC said it is also seeking an order requiring Balwani to pay a fine and prohibiting him from acting as an officer or director of a public company.
Balwani's attorney told CNBC he believed the SEC action was "unwarranted," and that Balwani
"accurately represented Theranos to investors to the best of his ability" and "took on significant financial risk investing in Theranos."
Theranos was once considered a high-flying start-up, and Holmes graced major magazine covers, touted as the personification of innovation. But Wall Street Journal investigations over the past five years questioned the efficacy of Theranos' blood testing technology, raising flags for regulators.
(Read more of the Wall Street Journal's original Theranos reporting on WSJ.com)
Holmes responded to the Journal's investigations in 2015, telling CNBC's Jim Cramer, "This is what happens when you work to change things. First they think you're crazy, then they fight you, and then all of a sudden you change the world," mirroring a quote that's often misattributed to Mahatma Gandhi.