Theranos, Blood-Testing Company Plagued By Scandal, Says It Will Dissolve

Sep 06, 2018, 13:59
Theranos, Blood-Testing Company Plagued By Scandal, Says It Will Dissolve

Mr Taylor said Theranos had run "out of time" to secure further investment or secure a buyer for its assets.

The end is nigh for Theranos, the allegedly fraudulent blood testing firm, according to a new report. An investigation by The Wall Street Journal in October 2015 revealed that Theranos was having trouble with the accuracy of its results, and a federal investigation began six months later.

The Fortress Investment Group loaned $65 million to Theranos previous year, with one condition being that Theranos maintain a cash level that has now been breached-hence the dissolution process that will play out over the coming months.

Theranos founder Elizabeth Holmes, who started the company when she was 19, was celebrated as a rising Silicon Valley star until it became clear that numerous claims about the company's supposedly revolutionary blood test were bogus.

Holmes, who was once considered a wunderkind of Silicon Valley, and Balwani were charged with conspiracy to commit wire fraud and nine counts of wire fraud each.

Ms Holmes herself became a business pin-up, wearing a black turtleneck jumper that drew comparisons with Steve Jobs, while profiles regularly pointed out that, like other successful tech entrepreneurs such as Bill Gates and Mark Zuckerberg, she was a college drop-out.

Its founder, Elizabeth Holmes, and her second-in-command are facing criminal charges on accusations that they defrauded investors, doctors and patients. The company claimed it could perform a number of traditional lab tests with just a few drops of blood.

Today, David Taylor, who was appointed CEO back in June, penned a letter that said Theranos will dissolve after paying creditors what remains of their cash.

As part of the settlement, Ms Holmes had to return millions of shares to the privately held company and pay a $500,000 fine.

Investors lost nearly $1 billion in the company, The Journal reported. At one time, Theranos was worth more than US$10 billion. Walgreens ended its relationship with Theranos in 2016.

The Securities and Exchange Commission brought civil fraud charges against Holmes and Balwani earlier this year.

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