Opening arguments in the highly anticipated trial of Elizabeth Holmes began on Wednesday, as jurors heard prosecutors argue the case before them was about “fraud, about lying and cheating to get money”.
Holmes, 37, arrived early at the San Jose courtroom on Wednesday and sat flanked by her attorneys. Media has flocked to the case, with more than 100 people waiting in line outside the courthouse hours before doors opened and nearly a dozen cameras stationed outside.
In a trial closely watched across the US, the former Theranos CEO is facing accusations the blood testing company knowingly defrauded its clients and investors.
Holmes founded the company after dropping out of Stanford University at age 19 and quickly became a star in the startup world, fashioning herself as the female Steve Jobs. She graced the cover of a number of magazines, and tests were rolled out in Walgreens stores.
Theranos dazzled Silicon Valley and was valued in the billions before its bold claims about revolutionary blood testing machines were revealed to be largely false. When the company fell from grace and folded in 2018, it became a cautionary tale about the Silicon Valley hype machine.
Federal prosecutors argued that Holmes and her alleged co-conspirator, her former romantic partner and business associate Ramesh “Sunny” Balwani, defrauded investors and deceived patients when the company began making its tests commercially available.
“Out of time and out of money, Elizabeth Holmes decided to lie,” the US attorney Robert Leach said.
Lionizing media coverage of the company and its CEO were crucial in polishing Theranos’s image, prosecutors alleged.
“Her deceit of reporters was an important way that she executed her fraud,” Leach said.
As the trial gets under way, early court filings suggested lawyers for Holmes would try to prove she was manipulated by an “abusive” relationship with Balwani into over-promising the capabilities of Theranos devices. Balwani, who faces his own trial in 2022 for fraud, has strongly denied these claims.
On Wednesday, the defense did not explicitly make the argument that Holmes was a victim of domestic abuse but alluded to it in opening statements. Speaking for Holmes, attorney Lance Wade said “trusting [Balwani] as her primary advisor was one of her mistakes”.
“There was another side of Holmes’ relationship with Balwani that the public never saw,” he added.
Prosecutors have sought to refute that argument, introducing into their evidence dozens of text messages between Balwani and Holmes suggesting a loving relationship.
“You are the breeze in desert [sic] for me – my water, and ocean,” she texted Balwani in May 2015, according to a recent court filing.
Holmes told a psychologist that Balwani was controlling, “monitoring her calls, text messages, and emails; physical violence, such as throwing hard, sharp objects at her; restricting her sleep”, according to a February 2020 filing from Balwani’s lawyers, who said the allegations required separate trials.
Wade painted a picture of Holmes as a hardworking young woman who did not understand that the technology at Theranos could not live up to her lofty ideals.
He said she “worked herself to the bone” for 15 years trying to make lab testing cheaper and more accessible. “She poured her heart and soul into that effort,” he added.
“In the end, Theranos failed, and Ms Holmes walked away with nothing,” he said. “But failure is not a crime – trying your hardest and coming up short is not a crime.”
“By the time the trial is over, you will see the villain the government just represented is actually just a living, breathing human being who did her very best each and every day – and she is innocent,” he added.
He also argued that the investors who were allegedly defrauded by Holmes were aware of the dangers of Silicon Valley investing and recognized that Theranos was a speculative investment.
“The investors in this case are incredibly sophisticated people who knew the risks of investing,” he said.
After both sides concluded their opening statements, the prosecution called its first witness: Denise Yam, a corporate controller at the company from 2006 to 2017, who detailed some financial figures from that time before proceedings came to a close for the day.
Holmes’s trial comes after months of delays caused first by the global pandemic and then Holmes’s own pregnancy. She had her first child with her partner, the hotel heir Billy Evans, on 5 August. Evans was in attendance at the trial, sitting several rows behind Holmes with the public.
Legal experts say beyond the alleged abuse defense, it appears Holmes will argue she did not fully understand the complex science behind the devices and believed they worked.
In court filings, Holmes’s attorneys have also argued there is a missing link between what Holmes herself knew and what Theranos employees told doctors and regulators about the company’s technology.
The most serious charges of wire fraud require prosecutors to prove Holmes acted with intent to defraud. To convict Holmes, the jury of 12 must unanimously find her guilty beyond a reasonable doubt of intending to defraud customers and investors.
Holmes’s lawyers said last year that she was “highly likely” to take the stand in her own defense, a move that experts called risky. It could backfire if jurors do not view her as credible and give prosecutors latitude to bring in a broader range of evidence, they said.
The trial officially began last week with three days of jury selection, in which more than 200 people were called and dozens were questioned. The court struggled to find jurors who had not heard about the widely covered case, asking many prospective jurors if they could set aside what they think they know and judge Holmes fairly.
Others were asked if they had experience with domestic violence that would affect their judgment, given the defense Holmes is expected to use.
A non-fungible token (NFT) marketplace has introduced policies to ban insider trading, after an executive at the company was discovered to be buying artworks shortly before they were promoted on the site’s front page.
OpenSea, one of the leading sites for trading the digital assets, will now prevent team members buying or selling from featured collections and from using confidential information to trade NFTs. Neither practice was previously banned.
“Yesterday we learned that one of our employees purchased items that they knew were set to display on our front page before they appeared there publicly,” said Devin Finzer, the co-founder and chief executive of the site.
“This is incredibly disappointing. We want to be clear that this behaviour does not represent our values as a team. We are taking this very seriously and are conducting an immediate and thorough third-party review of this incident so that we have a full understanding of the facts and additional steps we need to take.”
NFTs are digital assets whose ownership is recorded and traced using a bitcoin-style blockchain. The NFT market boomed earlier this year as celebrities including Grimes, Andy Murray and Sir Tim Berners-Lee sold collectibles and artworks using the format. But the underlying technology has questionable utility, with some dismissing the field as a purely speculative bubble.
The insider trading came to light thanks to the public nature of the Ethereum blockchain, on which most NFT trades occur. Crypto traders noticed that an anonymous user was regularly buying items from the public marketplace shortly before they were promoted on the site’s front page, a prestigious slot that often brings significant interest from would-be buyers. The anonymous user would then sell the assets on, making vast sums in a matter of hours.
One trade, for instance, saw an artwork called Spectrum of a Ramenification Theory bought for about £600. It was then advertised on the front page and sold on for $4,000 a few hours later.
One Twitter user, ZuwuTV, linked the transactions to the public wallet of Nate Chastain, OpenSea’s head of product, demonstrating, using public records, that the profits from the trades were sent back to a wallet owned by Chastain.
While some, including ZuwuTV, described the process as “insider trading”, the loosely regulated market for NFTs has few restrictions on what participants can do. Some critics argue that even that terminology demonstrates that the sector is more about speculation than creativity.
“The fact that people are responding to this as insider trading shows that this is securities trading (or just gambling), not something designed to support artists,” said Anil Dash, the chief executive of the software company Glitch. “There are no similar public statements when artists get ripped off on the platform.
“If Etsy employees bought featured products from creators on their platform (or Patreon or Kickstarter workers backed new creators etc) that’d be great! Nobody would balk. Because they’d be supporting their goal,” Dash added.
Sir Clive Sinclair died on Thursday at home in London after a long illness, his family said today. He was 81.
The British entrepreneur is perhaps best known for launching the ZX range of 8-bit microcomputers, which helped bring computing, games, and programming into UK homes in the 1980s, at least. This included the ZX80, said to be the UK’s first mass-market home computer for under £100, the ZX81, and the trusty ZX Spectrum. A whole generation grew up in Britain mastering coding on these kinds of systems in their bedrooms.
And before all that, Sir Clive founded Sinclair Radionics, which produced amplifiers, calculators, and watches, and was a forerunner to his Spectrum-making Sinclair Research. The tech pioneer, who eventually sold his computing biz to Amstrad, was knighted during his computing heyday, in 1983.
“He was a rather amazing person,” his daughter, Belinda Sinclair, 57, told The Guardian this evening. “Of course, he was so clever and he was always interested in everything. My daughter and her husband are engineers so he’d be chatting engineering with them.”
Sir Clive is survived by Belinda, his sons, Crispin and Bartholomew, aged 55 and 52 respectively, five grandchildren, and two great-grandchildren. ®
‘AI tech can have negative, even catastrophic, effects if they are used without sufficient regard to how they affect people’s human rights.’
The UN’s human rights chief Michelle Bachelet called for a moratorium on the sale and use of artificial intelligence technology until safeguards are put in place to prevent potential human rights violations.
Bachelet made the appeal on Wednesday (15 September) to accompany a report released by the UN’s Human Rights Office, which analysed how AI systems affect people’s right to privacy. The violation of their privacy rights had knock-on impacts on other rights such as rights to health, education and freedom of movement, the report found.
“Artificial intelligence can be a force for good, helping societies overcome some of the great challenges of our times. But AI technologies can have negative, even catastrophic, effects if they are used without sufficient regard to how they affect people’s human rights,” Bachelet said.
“Artificial intelligence now reaches into almost every corner of our physical and mental lives and even emotional states,” Bachelet added.
The report was critical of justice systems which had made wrongful arrests because of flawed facial recognition tools. It appealed to countries to ban any AI tools which did not meet international human rights standards. A 2019 study from the UK found that 81pc of suspects flagged by the facial recognition technology used by London’s Metropolitan Police force were innocent.
Bachelet also highlighted the report’s concerns on the future use of data once it has been collected and stored, calling it “one of the most urgent human rights questions we face.”
The UN’s report echoes previous appeals made by European data protection regulators.
The European Data Protection Board (EDPB) and the European Data Protection Supervisor (EDPS) called for a ban on facial recognition in public places in June. They urged EU lawmakers to consider banning the use of such technology in public spaces, after the European Commission released its proposed regulations on the matter.
The EU’s proposed regulations did not recommend an outright ban. The commission instead emphasised the importance of creating “trustworthy AI.”