We're almost starting to feel bad for Theranos. Once a Silicon Valley wunderkind, Theranos rose to fame on the back of its founder Elizabeth Holmes' Steve Jobs-turtle necks and claims that the company could reshape the blood testing industry. Theranos rode that hype to a $9 billion valuation, only to be brought down by skepticism from the medical community, federal investigations, and an eventual ban on Holmes operating a medical laboratory. Once considered the richest self-made woman in the world by Forbes, the magazine recalculated her wealth this summer, declaring her net worth to be, essentially, zero.
A company doesn't crash and burn so spectacularly without attracting lawsuits, of course, and Theranos has had its share. It's been hit with consumer class actions and its former partner, Walgreens, recently filed a $140 million breach of contract suit against the company. Those things are expected. But the company is now facing a much more unusual suit: a rare lawsuit alleging pre-IPO securities fraud.