UPDATE — NOVEMBER 2025: The coalition of 27 states and the District of Columbia has successfully halted 23andMe’s attempt to sell or transfer user genetic data as part of its Chapter 11 bankruptcy proceedings. The case, officially filed in the U.S. Bankruptcy Court for the Eastern District of Missouri (Case No. 25-04035), remains active under Judge Brian C. Walsh. At a preliminary hearing on June 17, 2025, the court declined to authorize any sale of customer data and later appointed a Consumer Privacy Ombudsman (CPO) to assess the privacy risks.
In the ombudsman’s interim report, submitted in July 2025, the CPO recommended that “any transfer of genetic or personally identifiable data be prohibited absent renewed, opt-in consent” from users. The court agreed to suspend the sale process until that recommendation could be fully reviewed. 23andMe has since amended its restructuring plan to clarify that no identifiable genetic or personal data “will be conveyed, sold, or transferred without further court order.”
As of November 2025, 23andMe continues negotiating a “sanitized restructuring plan” that would allow it to sell its drug-research subsidiary while excluding all customer DNA data. The Consumer Privacy Ombudsman’s final report is expected in December 2025, with an omnibus hearing set for January 21, 2026, to determine next steps. Meanwhile, several state attorneys general—including those from California, New York, and Illinois—have opened separate consumer-protection investigations into 23andMe’s data security practices and prior breach disclosures. For now, the multistate coalition has effectively frozen any sale of genetic data, ensuring that consent, privacy, and consumer protection remain at the forefront of 23andMe’s bankruptcy proceedings.
ORIGINAL NEWS POST:
Dozens of States Sue to Block 23andMe from Selling Genetic Data Amid Bankruptcy Proceedings
A coalition of states is suing genetic testing company 23andMe in federal bankruptcy court, seeking to block the company’s proposed sale of customer genetic data as part of its ongoing Chapter 11 proceedings. The complaint, filed in the U.S. Bankruptcy Court for the District of Delaware, argues that 23andMe cannot lawfully sell or transfer the personal information of millions of users, citing the company’s own privacy commitments and the sensitive nature of the data involved.
The states contend that 23andMe repeatedly promised consumers that their personal and genetic information would not be sold or shared without explicit, informed consent. According to the complaint, many customers only authorized their data to be used for specific research purposes or internal services—not for general sale or use by unknown third parties.
At the heart of the dispute is 23andMe’s proposal to treat its data assets—potentially including the personal and genetic profiles of more than 14 million users—as transferable property that can be sold to satisfy creditors. The states argue this plan is not only deceptive but unlawful, asserting that users’ data was collected under strict privacy assurances and cannot be commodified without violating consumer protection laws.
The lawsuit seeks a court order preventing the transfer or sale of customer data without consent and asks the court to appoint a consumer privacy ombudsman if any data transfer is considered. The states also request that the company be required to honor its previous privacy promises and destroy data where proper consent cannot be established.
The coalition includes attorneys general from several U.S. states and territories. The case underscores growing concerns around the treatment of sensitive personal data during corporate bankruptcies, particularly as more companies in health tech and biotech face financial challenges.
23andMe filed for Chapter 11 bankruptcy in early 2025. As of now, the court has not ruled on the states’ motion.
Need Help?
If you have questions or concerns about any global guidelines, regulations and laws, don’t hesitate to reach out to BABL AI. Their Audit Experts can offer valuable insight, and ensure you’re informed and compliant.
