David Taylor, who became CEO in June, sent an email to shareholders to announce the decision and inform them the company will seek to pay unsecured creditors its remaining cash over future months, according to the Wall Street Journal.
Theranos was founded and helmed by then-19-year-old Stanford dropout Elizabeth Holmes in 2003 promising the development of blood tests requiring only tiny amounts of blood (1/100 - 1/1000 the norm).
It is the latest twist in one of the most dramatic rise-and-fall stories United States business has ever seen and comes three months after Elizabeth Holmes, who founded the company at the age of 19, was charged with fraud along with Sunny Balwani, her former lover and the company's former chief operating officer. Starting in a basement located a few blocks away from campus, Holmes transformed her company to be worth over $1 billion in seven years time. The confirmation that the company would be closing down wouldn't have been a surprise to investors as Theranos has lost millions of dollars since its authenticity was questioned in 2015.
That came three months after the Securities and Exchange Commission charged Theranos with "massive fraud."
The executives have denied the charges and face a coming criminal trial. As Carreyrou's reportage showed, Theranos's supposedly revolutionary blood-testing processes-which involved mere drops of blood rather than the traditional vials-were slow, inaccurate and unreliable.
Theranos was once valued at $9 billion.
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'. Theranos does not have enough cash to keep going under terms of a loan from Fortress Investment Group it secured past year, according to the letter. Pretty soon the illusion of world-changing technology was replaced with reports of fraud, deception, bullying, intimidation and cover-up because the company's miracle technology didn't really work. "We are now out of time". The firm's remaining employees worked their last day on August 31. A notoriously secretive company, Theranos shared very little about its blood-testing machine, nicknamed Edison, with the public or medical community.
Holmes and the company settled the SEC's allegations. It perpetrated Silicon Valley's biggest fraud, and remains a cautionary tale for investors looking to pour their money on the "next great idea".
Lawyers for the company did not respond to requests for comment.