Genetic testing company 23andMe has received permission from a US bankruptcy judge to sell customers’ medical and ancestry-related data, raising significant privacy concerns as the company’s most valuable asset heads to auction.
US Bankruptcy Judge Brian C. Walsh has set a May 7 deadline for definitive offers and scheduled a final hearing on June 17, though he ordered the company to slow the overall pace by two weeks to accommodate his schedule and give creditors time to evaluate potential buyers.
“My overall reaction to the timeline is that it’s pretty tight,” Walsh said at the company’s first bankruptcy hearing in St. Louis. At his request, 23andMe agreed to push back the final court hearing from June 2 to June 17.
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The genetic data from more than 15 million customers now represents the bankrupt company’s most marketable asset despite mounting privacy concerns. 23andMe hasn’t been profitable since going public in 2021 and filed for Chapter 11 protection on March 23 after failing to find a buyer and rejecting a buyout offer from co-founder Anne Wojcicki.
Carole J. Ryczek, a lawyer with the US Trustee’s office, which acts as a public watchdog in bankruptcy proceedings, told Walsh that a privacy ombudsman is necessary to oversee the sale of customers’ genetic information.
“The bankruptcy case needs a neutral third party involved in the sale process to protect customers,” Ryczek said.
The company’s website experienced delays on Monday as users rushed to delete their data following consumer alerts issued by several state attorneys general instructing customers how to remove their information before the sale.
23andMe has maintained that the Chapter 11 reorganization doesn’t change how it stores or protects personal data, stating that any buyer would be required to comply with applicable privacy laws. According to court documents, customers can delete genetic details and other information from their accounts and request removal of saliva samples from the company’s “biobank.”
The sale has attracted renewed scrutiny of the company’s commercial partnerships, including its research agreement with pharmaceutical giant GSK, which leverages anonymized DNA data to develop new treatments.
In 2023, 23andMe suffered a data breach that compromised information about approximately seven million customers, including direct access to about 14,000 user accounts, resulting in a $30 million class-action settlement.
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