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.

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