Theranos, the Silicon Valley blood-testing company that built a business on false claims, is closing down.
Theranos CEO David Taylor sent an email to shareholders on Tuesday announcing that the company will cease operations and use its remaining $5 million in cash to pay back creditors, The Wall Street Journal reports. The decision comes after Theranos spent four months unsuccessfully trying to find a buyer for its remaining assets, and after the company failed to meet a debt obligation tied to a $65 million loan from Fortress Investment Group. Under the loan agreement, Fortress could foreclose on the company's assets if its cash reserves fell beneath a certain threshold. Investors who poured more than $700 million into the company will get nothing.
Theranos founder and former CEO Elizabeth Holmes catapulted to fame on the claims of inventing a "groundbreaking" method that allowed her company to run a range of lab tests on just a drop or two of blood, eventually earning Theranos a $9 billion valuation. In 2015, a series of articles in The Wall Street Journal questioned the company's technology, ultimately exposing Holmes for overstating Theranos's technological abilities while relying on traditional blood-testing machines for the vast majority of its tests. She was later banned from owning or operating a lab for two years.
Holmes is currently facing nine counts of wire fraud and two counts of conspiracy to commit fraud, as is her former boyfriend Ramesh "Sunny" Balwani, Theranos' former COO. They each face up to 20 years in prison. This spring, Holmes settled charges of "massive fraud" with the Securities and Exchange Commission. Balwani is fighting those charges and will be tried in federal district court in California.