State Attorneys General Launch Data Security Initiative in Character.AI Bankruptcy

Serdar HocamAuthor & Editor

Forty state attorneys general petitioned the court to protect children's and consumer data during Character.AI's bankruptcy proceedings and asset sales.

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Now that Character.AI is going bankrupt, what happens to all of its users’ data?

New York Attorney General Letitia James and a bipartisan coalition of forty state attorneys general have launched a legal initiative to demand strict protection of children's and consumer data during Character.AI's bankruptcy proceedings and asset transfers.

Intervention in Bankruptcy Proceedings

New York Attorney General Letitia James and forty state attorneys general filed a notice in Character.AI's bankruptcy case to highlight regulatory concerns regarding asset sales and transfers.

Multi-Year Investigation

This filing serves as a continuation of a multi-year investigation launched by the states into the company in 2024, involving consumer protection and privacy concerns.

Risks to Children's Safety

The attorneys general emphasized the serious risks involved in the transfer process, pointing to the sensitive nature of users' conversations with chatbots and the large number of children using the platform.

Company and Disney Status

Character.AI filed for bankruptcy and announced it would sell some of its assets to Disney, though Disney has not yet made a statement on the matter.

Executive Statement

Character.AI CEO Colin Adams stated that the attorneys general filing does not accurately reflect the platform's security and that they place great importance on user safety.

Requested Security Measures

The states have asked the judge to require the acquiring party of the assets to establish age verification systems, restrict interactions for minors, and grant the right to data deletion.