There's a massive qualitative difference here. If you're making something that is touted to be a breakthrough technology, you need to be actually doing it!

It is well-established from the history of hardware and software engineering that crashing bugs and glitches can be removed from a system through basic engineering. No one looks at a device that has some error messages and occasional crashes and says "Those crashes and errors are probably impossible to fix".

Theranos claimed to be doing a thing which everyone else in the field said was physically impossible (or at least physically impractical without an enormous nanotech breakthrough). Pretending that you're doing that thing, without actually having ever really done it, is indeed fraud.