Embattled blood-testing firm Theranos to dissolve

Blood-testing startup Theranos is now set to formally dissolve just weeks after its CEO Elizabeth Holmes was charged with criminal fraud for allegedly defrauding investors doctors and the public in a multi-million dollar scheme

According to a report from CNN Money, the Silicon Valley startup's founder and former CEO, Elizabeth Holmes, faces charges of fraud in connection with her practices with the company.

Wednesday's announcement comes almost three months after Theranos founder and former CEO Elizabeth Holmes and former Chief Operating Officer Ramesh Balwani were charged with criminal fraud.

CEO David Taylor confirmed that the firm will dissolve after efforts to pay creditors - to whom they owe $60 million (£46.4 million) - with its remaining supply of cash. At one time, Holmes was the youngest self-made female billionaire. The process of dissolving the company is expected to take six to 12 months.

That was until a 2015 Wall Street Journal story, when the first cracks in the story started to appear.

Since founded in 2003, Theranos raised more than US$700 million from venture capitalists and private investors, putting the blood testing startup at $10 billion valuation at its peak in 2013 and 2014. Her bold talk and black turtlenecks drew comparisons to Steve Jobs.

The Justice Department alleges that Holmes and Balwani transmitted the results despite knowing that the tests were unreliable.

Among the charges with which they have been indicted is claiming to investors that Theranos would enjoy sales of $1bn in 2015 when, in fact, it made just a few hundred thousand dollars.

Mr Taylor, who also serves as general counsel to the firm, said that Theranos had engaged the services of investment bank Jeffries to try to "maximise the value of the company" for shareholders.

Theranos tried to recover, but couldn't bring enough capital into the company. Walgreens ended its relationship with Theranos in 2016. Holmes settled with the SEC, agreeing to pay $500,000 in fines and penalties. Starting in a basement located a few blocks away from campus, Holmes transformed her company to be worth over $1 billion in seven years time.

The gizmo that the company invented to collect the blood samples, the "nanotainer", would be sent to Theranos's own laboratories.

When 19-year-old Elizabeth Holmes developed the idea of using microchip-enabled technology to conduct blood tests, she realized that she needed to build a company that would make the testing cheaper, more convenient, and accessible to consumers.

Information for this article was contributed by staff members of The Associated Press, by Jeff Sutherland of Bloomberg News and by Reed Ableson of The New York Times.

Related news: