News Controversial Silicon Valley health tech firm 'dissolves'

Alicia Farmer
September 7, 2018

But in February of the next year, this apparent fairy tale of modern medical technology started to show signs of coming down to Earth. Caught up in a web of conspiracy and fraud, she finally chose to formally dissolve the company on 4 September 2018 - after assuring to pay back unsecured creditors their investment money.

Shareholders are expected to receive nothing after the firm's collapse.

The indictment by the US attorney in San Francisco alleging wire fraud follows claims by the Securities and Exchange Commission that Theranos, Holmes and Balwani lied about the company's technology while raising more than $700 million to build the medical-testing startup. Thus, Theranos came into existence. Theranos is known for its false claims to have devised blood tests that only needed very small amounts of blood. The patch would consist of a blood collection vessel dubbed as the "nanotainer", and an analysis machine called the "Edison".

The firm was one of the darlings of Silicon Valley after raising $700 million from investors. The breakthrough technology was too good for investors to pass up, and far too good for the world not to believe. At one time, Holmes was the youngest self-made female billionaire.

The action is the final act in Theranos' dramatic downfall.

On the strength of her claims, Theranos rolled out its vaunted finger-stick blood tests in Walgreens stores in California and Arizona and rocketed to a valuation of more than $9 billion, making Ms. Holmes a billionaire and media celebrity. This was followed by a Food and Drug Administration (FDA) report that claimed that the "nanotainer" was "not validated under actual or simulated use conditions".

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The most damaging revelation in the article was that the nanotainers themselves were so flawed that Theranos had been using equipment made by other companies to carry out blood tests in its laboratories.

After years of damning headlines, federal investigations, lawsuits, fines, infighting and desperate attempts to save the furniture, Elizabeth Holmes' Theranos is officially dead and buried. But her net worth was later revised down to nothing.

Taylor, who took over from her as CEO in June, said in the email cited by The Journal that Theranos was in default for a loan from Fortress Investment Group, which now has the right to take ownership of all of its assets.

The news comes as Theranos founder Elizabeth Holmes and her second-in-command face criminal charges on accusations that they defrauded investors, doctors, and patients. As part of the settlement, Holmes and Theranos did not admit or deny the allegations.

Friday, Aug 31. was the last day of work for Theranos' remaining two-dozen employees and overall, investors have lost about $1 billion, the WSJ reported. It perpetrated Silicon Valley's biggest fraud, and remains a cautionary tale for investors looking to pour their money on the "next great idea".

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