Scandal-ridden health startup Theranos announced Tuesday that it will formally dissolve, just weeks after its founder was hit with federal fraud charges, The Wall Street Journal reported.
The company told shareholders in an email that it will dissolve and pay out the remaining cash to creditors, according to the Journal.
Elizabeth Holmes, founder of the embattled blood-testing company, was charged with fraud alongside Ramesh “Sunny” Balwani, the former chief operating officer of Theranos.
{mosads}Holmes and Balwani are also accused of lying to investors about the company’s technological abilities.
Holmes and Balwani in March were also charged by the Securities and Exchange Commission (SEC) with “massive fraud.” The SEC accused them of lying about the company’s abilities, financial health and connections to the Department of Defense.
The pair has denied the charges and faces potential decades in prison and massive fines.
Holmes founded the company in 2003 to develop technology that she claimed was able to conduct clinical tests on small amounts of blood. But the Justice Department alleges she and Balwani could not deliver on those promises.
According to the indictment, the company gave doctors — and through them, their patients — “materially false and misleading information concerning the accuracy and reliability of Theranos’s blood testing services.”
The Justice Department alleges that Holmes and Balwani transmitted the results despite knowing that the tests were unreliable.