Wounded blood testing startup Theranos just got hit with another major legal buzz saw—one that could snowball into a class action tussle with its investors.
The latest suit, filed Monday by Robert Colman, co-founder of investment firm Robertson Stephens, and another private defendant and Theranos share purchaser named Hilary Taubman-Dye, alleges that Theranos consistently and deliberately misled its investors through outsize claims about its technology’s capabilities and potential to transform diagnostic testing.
“Thousands of Theranos investors, including those who bring this class action, were spoon-fed continuous lies from the company’s CEO who touted the company’s ‘world-changing’ technology that would ‘revolutionize’ the industry,” Steve Berman, an attorney representing the plaintiffs, said in a statement. “After months of wooing investors to the tune of its CEO’s $9 billion net worth, Theranos’ bubble has burst, and we now see the truth—that Theranos’ promises were built on false statements and omissions.”
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Theranos was once a Silicon Valley darling. But it’s been hit with a barrage of regulatory scrutiny and investigations surrounding its controversial “finger-prick” blood testing technology. Initially, Theranos claimed it could test for all sorts of diseases with just a tiny bit of blood before revealing that many of its consumer diagnostics it did had relied on conventional machinery).
The company and founder Elizabeth Holmes have been accused by the likes of pharmacy giant Walgreens (WBA), which scuttled a collaboration with the upstart earlier this year and has since sued Theranos for breach of contract, of deliberately withholding information about its technology.
The latest suit has the potential to attract more participants since one of the original plaintiffs, Taubman-Dye, purchased the privately-held Theranos’ shares through a third-party online broker SharePost. She attempted to cancel her purchase after initial news of Theranos’ troubles broke, but she was unable to do so.
Fortune has contacted Theranos for comment on the latest suit and will update this post if it responds. The firm has previously said that it plans to cooperate with regulator inquiries, and that Holmes herself is “devastated” by the problems that related to her company’s technology.
