September 23, 2018

Theranos to shut down: Investors lose US$1B

07 September 2018, 11:31 | Rodolfo Wallace

Blood-testing startup Theranos reportedly to dissolve

Holmes who was once considered a wunderkind of Silicon Valley launched Theranos in 2003 in Palo Alto California pitching its technology as a cheaper way to run dozens of blood tests

Theranos - the Silicon Valley blood-testing startup whose former top executives are accused of carrying out a massive, years-long fraud - is shutting down.

Taylor said the company is looking to pay its remaining cash - roughly $5 million - to creditors, which could take about six to 12 months.

It also added Theranos founder Elizabeth Holmes has settled a shareholder lawsuit in July that was created to recover whatever can be salvaged from the firm.

Holmes and her ex-boyfriend Ramesh "Sunny" Balwani were indicted back in June on nine counts of wire fraud and two counts of conspiracy to commit wire fraud.

While Theranos touted its technology as revolutionary, the blood analyzer had only been successfully tested a few times, the Securities and Exchange Commission concluded.

Holmes and the company settled the SEC's allegations. In October 2015, the Wall Street Journal (WSJ) released an expose on the company that questioned the validity of their technology.

Taylor's email appears to herald the final stages of Theranos, which was once one of Silicon Valley's most lauded startups, drawing investments from Oracle (ORCL) founder Larry Ellison and media mogul Rupert Murdoch.

She carefully crafted her image as well, wearing nearly entirely black turtleneck sweaters that earned her the moniker in Silicon Valley as 'the next Steve Jobs'. They both face a maximum sentence of 20 years in prison and a fine of $250,000, plus restitution to those found to have been defrauded, on each count.

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Investors bought what Holmes was selling and invested hundreds of millions of dollars in the company.

A national partnership with Walgreens would eventually have resulted in Theranos Wellness Centers within miles of every American.

According to the email, Theranos doesn't have enough money to pay creditors in full. She eventually convinced her chemical engineering professor to join her, and he gave up his Stanford tenure to join her new company Theranos, which is an amalgam of the words "therapy" and "diagnosis".

Balwani continues to fight the SEC's charges against him.

The company did not immediately respond to Ars' request for comment.

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.

FOX Business' Brittany De Lea contributed to this article.

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