(Patriot.Buzz) – After a massive data breach compromised millions of Americans’ genetic information, DNA testing giant 23andMe decided to file for bankruptcy.
Customers are now warned to delete their genetic data as privacy experts raise concerns about what happens to sensitive DNA records during bankruptcy proceedings.
The once $6 billion company has plummeted to a mere $48 million valuation amid growing fears that personal genetic information could be sold to the highest bidder.
23andMe Holding Co. officially filed for Chapter 11 bankruptcy protection in the US Bankruptcy Court for the Eastern District of Missouri.
The company, which once revolutionized at-home genetic testing, is seeking to secure a sale after suffering huge losses following a 2023 data breach that affected nearly 7 million customers.
23andMe Co-founder Anne Wojcicki has stepped down from her leadership role as CEO but remains on the board.
Her departure comes as she pursues a bid to acquire the company as an independent bidder.
Company CFO Joe Selsavage will serve as interim CEO during the bankruptcy proceedings.
23andMe Board Chairman Mark Jensen explained the company’s decision: “After a thorough evaluation of strategic alternatives, we have determined that a court-supervised sale process is the best path forward to maximize the value of the business.”
The California attorney general has advised users to request the deletion of their data and the destruction of genetic material samples.
The move comes as concerns mount about what will happen to the sensitive information of 14 million customers.
This is particularly alarming since federal health privacy laws like HIPAA do not cover direct-to-consumer genetic testing companies.
The company’s downfall has been quick and dramatic. After going public in 2021 with a valuation of approximately $6 billion, 23andMe’s value has collapsed to about $48 million.
The devastating data breach in 2023 damaged customer trust and led to a $30 million lawsuit settlement and forced the company to lay off 40% of its workforce.
Wojcicki’s latest offer values the once-thriving company at a mere $11 million.
She stated, “If I am fortunate enough to secure the company’s assets through the restructuring process, I remain committed to our long-term vision of being a global leader in genetics.”
Experts have pointed out concerns about the lack of regulations protecting Americans’ genetic information.
I. Glenn Cohen from Harvard noted, “Interestingly, once upon a time, the Pentagon told military personnel not to use these at-home DNA kits because it was concerned about national security.”
While the company has secured debtor-in-possession financing of up to $35 million from JMB Capital Partners to maintain operations during bankruptcy, the fate of customers’ genetic data remains uncertain.
23andMe’s privacy policy allows data sharing with service providers and explicitly reserves the right to transfer data in case of sale or bankruptcy.
This case highlights the urgent need for stronger federal privacy protections.
As Cohen pointed out, “The U.S. has a federal health privacy law that’s a bit out of date compared to our peer countries in Europe.”
For Americans concerned about privacy and liberty, this bankruptcy serves as a sobering reminder that any corporation could buy and sell their most personal information with little regard for their rights.
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