Embattled blood-testing firm Theranos to dissolve

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Theranos the blood-testing company founded by Elizabeth Holmes is going out of business. Gilbert Carrasquillo Getty Images

Theranos was in default under its credit facility with Fortress Investment Group, Taylor said in the letter.

In 2017, Theranos agreed to a two-year ban from the blood-testing business.

Holmes advertised the company as a cheaper and more efficient way for patients to test for life-threatening conditions, like cancer and diabetes, with just a few drops of blood from their fingers. But that unraveled spectacularly under the scrutiny of Wall Street Journal investigative reporter John Carreyrou.

Theranos Chief Executive Officer Elizabeth Holmes speaks on stage at the Glamour Women of the Year Awards where she receives an award, in the Manhattan borough of NY, U.S., November 9, 2015.

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.

Holmes and Balwani both pleaded not guilty at their arraignment.

The company told shareholders in an email that it will dissolve and pay out the remaining cash to creditors, according to the Journal.

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Besides Fortress, Theranos owes at least $60 million to unsecured creditors, Taylor said.

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.

But Theranos' blood-testing machines weren't reliable, and the company itself relied on other companies' devices to run blood tests. "We are now out of time", Taylor wrote in the email, a copy of which was published by the WSJ (paywall). Theranos was founded in 2003 by Holmes when she was only 19.

Investors bought what Holmes was selling and invested hundreds of millions of dollars in the company.

Investors lost nearly $1 billion in the company, The Journal reported. Each invested $100 million or more in Theranos-investments that are now worthless.

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

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