On Monday, twenty-seven U.S. states, along with the District of Columbia filed a lawsuit in bankruptcy court to prevent 23andMe from selling customers’ personal genetic information without their explicit consent. The move comes as a biotechnology company seeks approval to purchase the financially troubled genetic testing firm. The lawsuit underscores growing concerns over the ethical handling of sensitive health and genetic data in bankruptcy proceedings.
States Argue Genetic Data Requires Consent, Not Commodification in Corporate Bankruptcy Sales
Oregon Attorney General Dan Rayfield emphasized that genetic data—including biological samples, DNA, and medical records—is far too personal to be treated as a regular asset in a sale. The lawsuit asserts that individuals must give clear and informed consent before their private health information can be transferred or sold. The states argue that consumer privacy must take precedence over corporate financial interests, especially when such deeply personal data is involved.
States Challenge 23andMe Sale Over Genetic Privacy as Regeneron Acquisition Sparks Legal Fight23andMe gained popularity with its saliva-based DNA kits, helping consumers explore ancestry and connect with relatives. Founded in 2006, it also ventured into health research and pharmaceutical development. However, the company faced financial difficulties after going public in 2021. In March 2025, it filed for Chapter 11 bankruptcy and laid off 40% of its staff, triggering fears about what would happen to its vast repository of customer data.
Regeneron Acquisition Plan Raises Privacy Concerns Amid Ongoing Bankruptcy Court Scrutiny
Pharmaceutical giant Regeneron has proposed a $256 million acquisition of 23andMe. The company stated it would honor existing privacy agreements and comply with all applicable laws concerning data protection. Regeneron pledged to process customer information based on existing terms of service and privacy policies, and to implement robust security measures. Despite these assurances, the states behind the lawsuit remain wary about the true implications for consumer privacy.
As part of the bankruptcy proceedings, a court-appointed consumer privacy ombudsman has been tasked with evaluating the potential risks to customer privacy posed by the proposed sale. The ombudsman’s findings, due to be submitted to the court by Tuesday, are expected to play a crucial role in determining whether the sale to Regeneron will be permitted. The outcome of this case could set an important precedent for how consumer genetic data is treated in future corporate bankruptcies.
