23andMe Faces Legal Challenges Amid Bankruptcy

23andMe is currently embroiled in a lawsuit over its intentions to sell customers’ genetic data, which has raised significant concerns about privacy.

This week, 27 states, along with the District of Columbia, took legal action against the company in the U.S. Bankruptcy Court located in the Eastern District of Missouri.

The core claim suggests that 23andMe cannot sell users’ genetic identities without first obtaining explicit consent from each customer. The legal filing argues for strong, informed consent before any data transactions.

The suit is backed by various states, including Arizona, Colorado, Connecticut, and many more, all stating that 23andMe should not be allowed to exchange such personal data without the necessary permissions.

New York Attorney General Letitia James emphasized this point: “23andMe cannot auction the personal genetic information of millions without their consent.” Many consumers trust the company with their sensitive information, and they deserve clarity on how it’s handled.

A spokesperson for 23andMe dismissed the attorney general’s claims, stating the lawsuit lacks merit. They argue that the proposed sales are compliant with their privacy policy and applicable laws. Moreover, they have reportedly requested that bidders follow their policy to protect customer rights during the sales process.

Notably, Regeneron Pharmaceuticals was identified as a successful bidder for 23andMe’s assets earlier this year, with a bid of $256 million. Following that, the TTAM Research Institute, founded by Anne Wojcicki, made an even higher bid of $355 million.

23andMe initiated Chapter 11 bankruptcy proceedings in March, revealing anticipated asset values between $100 million and $500 million. Founded in 2006, the company now faces a critical juncture as it navigates these legal challenges and seeks bidders for its future.