Elizabeth Holmes, founder of Theranos, stepped down as the group’s chief executive after being indicted © Bloomberg

Theranos, the scandal-ridden blood-testing group, is to dissolve and return any remaining cash to its creditors, drawing the curtain on a saga that has gripped Silicon Valley.

The company announced the move in a recent email to its investors, according to two people who said they saw a copy of the message. The news was first reported by The Wall Street Journal.

The dissolution of the company came three months after its founder Elizabeth Holmes was charged by federal prosecutors for perpetrating a multimillion-dollar fraud that allegedly deceived investors, doctors and patients. 

Theranos did not respond to a request for comment. 

Investors had been expecting the move since June when prosecutors announced the criminal charges against Ms Holmes. She stepped down as chief executive immediately after being indicted and handed the reins to David Taylor, the company’s general counsel.

It marks the final act for a company that was once hailed as a Silicon Valley rock star after it pledged to revolutionise blood testing and consign needles to history with a new system needing just a few drops of blood. 

Ms Holmes sold that vision to a roster of well known investors, including Walgreens, the drugstore group, media mogul Rupert Murdoch, and Oracle co-founder Larry Ellison. Theranos raised $700m, giving it valuation of roughly $9bn at its zenith. 

She also assembled a board of directors that included the elite of political and corporate America, including Jim Mattis, the current US defence secretary, two former secretaries of state — Henry Kissinger and George Shultz — and David Boies, the high-profile lawyer.

However, prosecutors alleged that Ms Holmes and Ramesh “Sunny” Balwani, the company’s former chief operating officer, knowingly oversold the capabilities of their blood-testing system, which produced erroneous results that posed a risk to patient health.

The pair have been charged by the US Department of Justice with two counts of conspiracy to commit wire fraud and nine counts of wire fraud. If convicted, they face a maximum of 20 years in prison and a fine of $250,000 per count.

Ms Holmes and Mr Balwani denied the charges. Neither they nor their lawyers responded to a request for comment on Tuesday evening. 

The criminal indictment followed civil charges brought earlier this year by the Securities and Exchange Commission. Ms Holmes and Theranos have settled the SEC case, which Mr Balwani is fighting.

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