Theranos, blood test company racked by fraud allegations, is shutting down

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Theranos, the blood-testing company founded by Elizabeth Holmes, is going out of business.

Ms Holmes herself became a business pin-up, wearing a black turtleneck jumper that drew comparisons with Steve Jobs, while profiles regularly pointed out that, like other successful tech entrepreneurs such as Bill Gates and Mark Zuckerberg, she was a college drop-out.

Embattled blood-testing company Theranos Inc will soon formally dissolve, the Wall Street Journal reported here on Tuesday, citing a shareholder email.

Scandal-hit U.S. blood-testing start-up Theranos is to formally dissolve, the firm's chief executive David Taylor has told shareholders in an email. But that unraveled spectacularly under the scrutiny of Wall Street Journal investigative reporter John Carreyrou.

Theranos was in default under its credit facility with Fortress Investment Group, Taylor said in the letter. With what they believe at about $5 million in total cash remaining, their debt far exceeds this at approximately $60 million.

It says most of the company's remaining two dozen employees finished work last Friday and that Fortress, the U.S. private equity firm, is set to take control of the company's patents - leaving just $5m to be distributed among unsecured creditors. After the assignment process, the company intends to dissolve.

Investors lost nearly $1 billion in the company, The Journal reported.

They each face nine counts of wire fraud and two counts of conspiracy to commit wire fraud.

Ms Holmes raised over $700m in funding for Theranos, but when she tried to pitch the technology to the US Department of Defense in 2012, her pitch was rejected due to the devices' unpredictable results.

Holmes and Balwani are accused of faking demonstrations of the technology, lying to investors about the anticipated returns, lying to the media, lying about the deployment of the technology on the battlefield, using third-party equipment to conduct tests while claiming to use Theranos's own gear, and misrepresenting the progress of a partnership with Walgreens (wba).

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