Published: Fri, September 07, 2018
Medical | By Vicki Mclaughlin

News Controversial Silicon Valley health tech firm 'dissolves'

News Controversial Silicon Valley health tech firm 'dissolves'

The company's founder Elizabeth Holmes was charged with wire fraud after stepped down as CEO this past June, as well as the former president Ramesh (Sunny) Balwani.

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.

Enjoying this story? Subscribe to FierceBiotech! In 2015, Forbes declared Holmes to be the world's youngest self-made female billionaire - with a personal net worth of $4.5 billion.

The current liquidation process could mean it takes 6 to 12 months for creditors to receive Theranos' remaining cash.

Holmes was seen for a time as a rising star in Silicon Valley, appearing at events like the Women In Technology and Politics dinner hosted by Glamour and Facebook, the Vanity Fair New Establishment Summit and events hosted by the Wall Street Journal and TechCrunch. Founded in 2003 by then teenage Stanford dropout Elizabeth Holmes, Theranos grew into a $9 billion firm based on its promise of a blood test requiring only a finger prick, rather than a vial of blood.

The Securities and Exchange Commission brought civil fraud charges against Holmes and Balwani earlier this year.

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".

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Prosecutors say they engaged in a multi-million dollar scheme to defraud investors, doctors and patients.

The unraveling of Theranos came after reports alleged it was not using its own technology in numerous blood tests it performed.

A national partnership with Walgreens would eventually have resulted in Theranos Wellness Centers within miles of every American.

Investors in Theranos include the Waltons of Walmart fame, Oracle founder Larry Ellison, media mogul Rupert Murdoch, venture capitalist Tim Draper and others. Holmes settled with the SEC, agreeing to pay $500,000 in fines and penalties. Balwani refused to settle with the SEC.

Theranos investors have reportedly lost almost US$1 billion (AU$1.4 billion).

When 19-year-old Elizabeth Holmes developed the idea of using microchip-enabled technology to conduct blood tests, she realized that she needed to build a company that would make the testing cheaper, more convenient, and accessible to consumers.

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.

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