Cambridge Analytica, the political consultancy firm at the centre of the Facebook data-sharing scandal, is shutting down, media reported.
The firm was accused of improperly obtaining personal information on behalf of political clients.
According to Facebook, data of up to 87 million of its users was harvested by a quiz app and then passed on to the political consultancy.
The social network said its own probe into the matter would continue, the BBC reported.
"This doesn't change our commitment and determination to understand exactly what happened and make sure it doesn't happen again," said a spokesman.
"We are continuing with our investigation in cooperation with the relevant authorities."
Clarence Mitchell, a spokesman for Cambridge Analytica, referred the BBC to a statement on the firm's website.
"Over the past several months, Cambridge Analytica has been the subject of numerous unfounded accusations and, despite the company's efforts to correct the record, has been vilified for activities that are not only legal, but also widely accepted as a standard component of online advertising in both the political and commercial arenas," it said.
"Despite Cambridge Analytica's unwavering confidence that its employees have acted ethically and lawfully... the siege of media coverage has driven away virtually all of the company's customers and suppliers.
"As a result, it has been determined that it is no longer viable to continue operating the business."
The statement added that its parent company SCL Elections was also commencing bankruptcy proceedings.
The UK's Financial Times newspaper said it has spoken to another ex-employee of Cambridge Analytica, on condition of anonymity, who said they were sure the company would emerge "in some other incarnation or guise".
The Observer journalist whose investigation first exposed the data privacy scandal has suggested that the public remain sceptical.
The chair of a UK parliament committee investigating the firm's activities also raised concerns about Cambridge Analytica and SCL Elections' move.
"They are party to very serious investigations and those investigations cannot be impeded by the closure of these companies," said parliamentarian Damian Collins.
"I think it's absolutely vital that the closure of these companies is not used as an excuse to try and limit or restrict the ability of the authorities to investigate what they were doing," the BBC quoted Collins as saying.
In March, Channel 4 aired undercover footage of Cambridge Analytica's CEO, Alexander Nix, giving examples of how the firm could swing elections around the world with underhand tactics such as smear campaigns and honey traps.
The UK-based company, which denies any wrongdoing, has an extensive record of working abroad on many election campaigns, including in Italy, Kenya and Nigeria.
Cambridge Analytica's chief executive Alexander Nix was suspended in March after the Channel 4 News footage was aired.
In April, Cambridge Analytica said it had only licensed 30 million records belonging to US citizens from the quiz app's creator Aleksandr Kogan, and that they had not been used in the US presidential election.
The firm added that it had since deleted all the information despite claims to the contrary by others.
However, a Guardian report states that the team behind Cambridge Analytica has set up a new company called Emerdata. Alexander Nix, the suspended CEO of CA is listed as a director along with other executives from SCL. Interestingly, Rebekah and Jennifer Mercer, daughters of hedge fund tycoon Robert Mercer are also listed as directors at the company. The company is listed under ‘data processing, hosting, and related activities’ and shares an address in Canary Wharf with Cambridge Analytica's parent company, SCL Group.