Blood-testing startup Theranos reportedly to dissolve
Company execs were charged with fraud over false claims about the company's technology, business and financial performance.
Theranos, the blood-testing company founded by Elizabeth Holmes, is going out of business.
Blood-testing company Theranos plans to go out of business in the wake of one of the tech community's biggest frauds, the Wall Street Journal reported Tuesday night.
The company plans to formally dissolve itself and pay unsecured creditors its remaining cash in coming months, the newspaper reported, citing an email sent to shareholders.
The announcement comes six months after Theranos and its chief executive, Elizabeth Holmes, agreed to settle fraud charges with the US Securities and Exchange Commission in relation to false claims made about the company's technology, business and financial performance.
The SEC charged Holmes and former President Ramesh "Sunny" Balwani with deceiving investors into believing the portable blood analyzer could conduct comprehensive blood tests from drops of blood. In reality, the SEC says, the analyzer could only complete a small number of tests, and the company "conducted the vast majority of patient tests on modified and industry-standard commercial analyzers manufactured by others."
The SEC also alleged that claims the company would generate more than $100 million in revenue in 2014 were false, as it generated a little more than $100,000.
Holmes and Balwani settled those civil charges, with Holmes agreeing to pay a $500,000 penalty, returning 18.9 million shares of company stock, giving up majority voting control, and being prohibited from serving as an officer or director of a public company for 10 years.
Three months later, the Justice Department charged the pair with criminal wire fraud, accusing both of defrauding investors and knowingly endangering people's lives with inaccurate blood test results. The charges could put them in prison for up to 20 years and add additional fines of $250,000 for each count of wire fraud.
Once valued at $9 billion, the Newark, California-based company faced increased scrutiny, along with civil and criminal investigations, since a Wall Street Journal report in October 2015 suggested its blood-testing devices were flawed.
In 2016, the federal Centers for Medicare & Medicaid Services banned Holmes from operating a lab for two years and revoked the license for Theranos' lab in California. And in May, the company settled a pair of lawsuits from an investor claiming the company misled it to gain a nearly $100 million investment.
The Wall Street Journal reported that Theranos laid off most of its remaining employees in early April.
Theranos didn't immediately respond to a request for comment.
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