Theranos, Blood-Testing Company Plagued By Scandal, Says It Will Dissolve

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Its founder, Elizabeth Holmes, and her second-in-command are facing criminal charges on accusations that they defrauded investors, doctors and patients.

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.

Theranos was unable to sell itself and is now looking to pay unsecured creditors its remaining cash of about $5 million in the upcoming months, according to an email The Wall Street Journal obtained that CEO David Taylor sent to shareholders. If convicted, they could face prison sentences that would keep them behind bars for the rest of their lives, and total fines of US$2.75 million each.

Holmes founded the company in 2003 to develop technology that she claimed was able to conduct clinical tests on small amounts of blood.

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But as the Journal revealed in a series of articles beginning in October 2015, Theranos's blood-testing device was unreliable and the company used it for just a fraction of the more than 240 tests it offered to consumers. Holmes said she was inspired to start the company in response to her fear of needles.

Holmes and Balwani are also accused of lying to investors about the company's technological abilities.

Vaulted by failed promises for its simple and comprehensive finger-stick blood test technology, the decision to dissolve the company comes after former CEO Elizabeth Holmes and ex-COO Ramesh "Sunny" Balwani were indicted in June on federal criminal charges of wire fraud and conspiracy. The story raised concerns about the accuracy of Theranos' blood testing technology, which put patients at risk of having conditions either misdiagnosed or ignored. Walgreens ended its relationship with Theranos in 2016. The SEC accused them of lying about the company's abilities, financial health and connections to the Department of Defense.

After the SEC charged her and the company with fraud earlier this year, Holmes was stripped of control and is barred from serving as an officer or director at any public company for the next decade.