Theranos founder Elizabeth Holmes has been charged for allegedly knowingly defrauding her investors with fake blood tests and lies about the product's ability.

A statement from the US Attorney's Office in the Northern District of California says Holmes and Theranos president Ramesh 'Sunny' Balwani engaged in a multi-million dollar scheme to defraud investors, and a separate scheme to defraud doctors and patients.

Holmes launched Theranos in 2003, spruiking the company as a cheaper and more efficient way for patients to test for life-threatening conditions, like cancer and diabetes, with just a few drops of blood from their fingers.

But the US Attorney's Office alleges Holmes and Balwani had sold Theranos' blood testing laboratory did not use any new machinery, instead purchasing third-party machines that were already in use in other laboratories.

Theranos founder Elizabeth Holmes (pictured) has been charged with wire fraud for misrepresenting the abilities of her blood testing product

Holmes and Theranos president Ramesh 'Sunny' Balwani allegedly told investors, doctors and patients their technology could deliver blood testing with less blood and faster results with their new technology (pictured), while knowing that was not true

The indictment claims machinery developed by Theranos 'was not capable of consistently producing accurate and reliable results for certain blood tests', and tests performed on the technology 'were likely to contain inaccurate and unreliable results'.

Pictured: Theranos' 'minilab', which Holmes and Bulwani used while allegedly pretending to test the blood of potential investors

Holmes and Balwani allegedly knew of the product's faults when they pitched their services to doctors and patients, but continued to try and sell the incredible powers of their analyzer, which they referred to as the TSPU, Edison, or minilab, to users and investors.

The pair are accused of claiming the analyzer could perform a full range of clinical tests using small blood samples drawn from a finger stick, and produce results more accurate and reliable than older methods, and at a faster speed - knowing it wasn't true.

Demonstrations of the technology given to potential investors were allegedly 'intended to cause potential investors to believe blood tests were being conducted on Theranos's proprietary analyzer when, in fact, the analyzer really was running a 'null protocol' and was not testing the potential investor's blood', the US Attorney's office said.

Holmes could face up to 20 years behind bars for her alleged crimes, and stepped down as CEO of Theranos shortly before her indictment was made public

Special Agent in Charge Bennett called Holmes and Balwani's actions a 'conspiracy', that 'endangered health and lives'.

If convicted, Holmes and Balwani face a maximum of 20 years behind bars and a fine of up to $250,000, plus restitution, for each charge.

Jeffrey B. Coopersmith, Balwani's attorney, said in a statement his client 'committed no crimes'.

'He did not defraud Theranos investors, who were among the most sophisticated in the world. He did not defraud consumers, but instead worked tirelessly to empower them with access to their own health information,' he said.

Mr. Balwani is innocent, and looks forward to clearing his name at trial.'

Before the indictment was made public, Theranos announced Holmes had stepped down as CEO, but will stay on as chair of the board.