Medicine

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

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

Theranos, which owes at least $60 million to unsecured creditors, will turn over its assets and intellectual property to credit and investment firm Fortress, says the e-mailed letter, first reported by The Wall Street Journal.

Holmes said Theranos had discovered a new way of doing blood testing, one able to do dozens of tests with just a prick of a finger and few droplets of blood.

The announcement comes almost three months after Theranos founder and former chief exective Elizabeth Holmes and former chief operating officer Ramesh Balwani were charged with criminal fraud.

In 2017, Theranos agreed to a two-year ban from the blood-testing business. Holmes stepped down from her position as CEO, and as Tuesday's announcement made clear, the company she founded will be no more.

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.

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But Theranos came under scrutiny after the Journal published articles questioning its claims.

In June, Holmes appeared in federal court in San Jose to face charges of criminal fraud, and resigned as CEO of Theranos. In October 2015, the Wall Street Journal (WSJ) released an expose on the company that questioned the validity of their technology. Theranos does not have enough cash to keep going under terms of a loan from Fortress Investment Group it secured a year ago, according to the letter.

She carefully crafted her image as well, often wearing black turtleneck sweaters that led some in Silicon Valley to describe her as "the next Steve Jobs", a reference to the Apple founder. Pretty soon the illusion of world-changing technology was replaced with reports of fraud, deception, bullying, intimidation and cover-up because the company's miracle technology didn't really work.

Aforementioned CEO David Taylor's approval rating hovered around 52% until Glassdoor shut down the metric after July 7, which it will sometimes do when a company is going through a leadership transition or time of crisis. "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". 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". Holmes settled with the SEC, agreeing to pay $500,000 in fines and penalties.

The big-name investors who poured money into Theranos will get nothing.