States take legal action as 23andMe attempts to sell customer genetic information amid bankruptcy

Bankrupt 23andMe is facing a lawsuit over its plans to sell customer genetic information.

Twenty-seven states and the District of Columbia took legal action this week against 23andMe in the U.S. Bankruptcy Court for the Eastern District of Missouri, the court overseeing the Chapter 11 bankruptcy proceedings that the genetic testing company entered earlier in the year. 

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The states contend 23andMe has "no right to sell their customers’ genetic identities to the highest bidder" unless the company "first obtain[s] express informed consent to the proposed transaction/transfer by each consumer impacted." 

They want the bankruptcy court to rule on "whether and to what extent" the genetic testing company can "sell and transfer to a third party such intimate customer data without first obtaining the express informed consent of its customers," according to the filing.

In the filing, the states said they were "not objectively opposed to any sale" but "contend that express, informed consent by each customer is necessary before any transfer of that customer’s data can take place."

The attorneys general that filed the lawsuit represent Arizona, Colorado, Connecticut, the District of Columbia, Florida, Illinois, Kansas, Kentucky, Louisiana, Maine, Michigan, Minnesota, Missouri, New Hampshire, New Mexico, New York, North Carolina, Oklahoma, Oregon, Pennsylvania, South Carolina, South Dakota, Utah, Vermont, Virginia, Washington, West Virginia and Wisconsin.

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"23andMe cannot auction millions of people’s personal genetic information without their consent," New York Attorney General Letitia James said in a statement. "New Yorkers and many others around the country trusted 23andMe with their private information, and they have a right to know what will be done with their information." 

A spokesperson for 23andMe told FOX Business that the arguments made by the attorneys general in the suit were "without merit." 

"The sale is permitted under 23andMe privacy policies and applicable law," the spokesperson said. "We required any bidder to adopt our policies and comply with applicable law as a condition to participating in our sales process. Customers will continue to have the same rights and protections in the hands of the winning bidder." 

The remaining bidders, Regeneron Pharmaceuticals and TTAM Research Institute, "have committed to abide by 23andMe privacy policies, and will continue to operate 23andMe as it has always been operated," according to the 23andMe spokesperson. 

In May, New York-based Regeneron announced it had been named the successful bidder in the auction for "substantially all" of 23andMe’s assets with a $256 million bid. 

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23andMe subsequently received a $305 million bid from Anne Wojcicki-founded TTAM Research Institute, setting the stage for another auction. 

The genetic testing company entered Chapter 11 bankruptcy in March to facilitate a sale of its business. In its bankruptcy petition, the company had estimated a range of $100 million to $500 million for its assets, with estimated liabilities in the same range. 

23andMe was originally founded in 2006.