Theranos bleeds dry, company to dissolve

06 September, 2018, 01:16 | Author: Andrea Terry
  • 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

The company will seek to pay unsecured creditors its remaining cash in coming months, the Journal said, citing a shareholder email.

She launched Theranos in 2003 in Palo Alto, California, pitching its technology as a cheaper way to run dozens of blood tests.

Holmes and Balwani are accused of faking demonstrations of the technology, lying to investors about the anticipated returns, lying to the media, lying about the deployment of the technology on the battlefield, using third-party equipment to conduct tests while claiming to use Theranos's own gear, and misrepresenting the progress of a partnership with Walgreens (wba).

Prosecutors had said Holmes and Balwani used advertising and solicitations to encourage doctors and patients to use its blood testing laboratory services despite knowing the company could not produce accurate and reliable results consistently.

It is the latest twist in one of the most dramatic rise-and-fall stories U.S. business has ever seen and comes three months after Elizabeth Holmes, who founded the company at the age of 19, was charged with fraud along with Sunny Balwani, her former lover and the company's former chief operating officer.


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'. At one time, Theranos was worth more than $10 billion and Holmes was the youngest self-made female billionaire. But that unraveled spectacularly under the scrutiny of Wall Street Journal investigative reporter John Carreyrou.

The Securities and Exchange Commission brought civil fraud charges against Holmes and Balwani in March. The SEC accused them of lying about the company's abilities, financial health and connections to the Department of Defense.

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

David Taylor, the Theranos general counsel who took over as CEO after the disgraced Elizabeth Holmes finally resigned in June, wrote to the company's stockholders to say all efforts to sell the operation had failed.

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