Theranos is finally shutting down after investors lost almost $1 billion

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

Blood-testing startup Theranos reportedly to dissolve

Holmes was seen for a time as a rising star in Silicon Valley, appearing at events like the Women In Technology and Politics dinner hosted by Glamour and Facebook, the Vanity Fair New Establishment Summit and events hosted by the Wall Street Journal and TechCrunch. Back in June, Elizabeth Holmes, Theranos founder and the company's former president, Ramesh "Sunny" Balwani, were indicted by a federal grand jury in California on charges of wire fraud.

In an email to shareholders, David Taylor, the current CEO of Theranos, announced that the company will dissolve and its remaining funds will be given to its unsecured creditors (via the Wall Street Journal).

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Theranos and Ms Holmes, its founder, claimed that Edison, their invention, a portable blood analyser, could conduct comprehensive tests using tiny amounts of blood taken from a pinprick on the finger, rather than vials filled with blood taken from veins.

"The defendants also represented to investors that Theranos would generate over $100 million in revenues and break even in 2014 and that Theranos expected to generate approximately $1 billion in revenues in 2015 when, in truth, the defendants knew Theranos would generate only negligible or modest revenues in 2014 and 2015", the U.S. Attorney's Office said.

"I write with hard news about the future of the Company", the letter from CEO David Taylor began.

The once-heralded blood-testing startup Theranos is shutting down, according to a media report. Holmes was subsequently banned from running a blood-testing lab, then from running a public company or serving on the board of one for the next decade.

Taylor said in addition to being in default with an investment group, Theranos owes at least $60 million to its unsecured creditors. At one time, Holmes was the youngest self-made female billionaire. "For example, allegedly, Holmes and Balwani knew that the analyzer, in truth, had accuracy and reliability problems, performed a limited number of tests, was slower than some competing devices, and, in some respects, could not compete with existing, more conventional machines". Holmes settled with the SEC by agreeing to pay $500,000 in fines and penalties, while Balwani is fighting the charges.

Theranos did not immediately respond to Reuters' request for comment. It perpetrated Silicon Valley's biggest fraud, and remains a cautionary tale for investors looking to pour their money on the "next great idea".

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