{"id":8701,"date":"2026-10-15T00:58:52","date_gmt":"2026-10-15T00:58:52","guid":{"rendered":"https:\/\/silvybrand.com\/?p=8701"},"modified":"2026-10-15T00:58:52","modified_gmt":"2026-10-15T00:58:52","slug":"new-york-ag-characterai-bankruptcy","status":"publish","type":"post","link":"https:\/\/silvybrand.com\/?p=8701","title":{"rendered":"Now that Character.AI is going bankrupt, what happens to all of its users\u2019 data?"},"content":{"rendered":"


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New York Attorney General Letitia James revealed<\/a> a years-long multi-state investigation against Character.AI as they now seek to require protections on consumer data sold through its bankruptcy proceeding.<\/p>\n<\/div>\n

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James is among 40 bipartisan AGs who filed a notice of interest<\/a> in Character.AI\u2019s bankruptcy case \u201cto put all parties on notice of the regulatory issues that will need to be addressed in any sale or transfer of the Debtor\u2019s business or assets.\u201d Character.AI announced Tuesday it was filing for Chapter 11<\/a> and selling some assets to Disney. But the AGs warn there could be serious risk involved in the transfer of the technology due to the \u201chighly sensitive nature of the conversations many users have with Character.AI chatbot characters, the large number of minors who use the product, the serious risks posed by specific features of the product.\u201d<\/p>\n<\/div>\n

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The filing also reveals that several of the states had been mid-investigation when Character.AI filed for bankruptcy. The states say they opened a probe into consumer protection and privacy concerns in 2024, following a lawsuit from the mother of a 14-year-old<\/a> who died by suicide allegedly \u201cseconds\u201d after talking with the chatbot.<\/p>\n<\/div>\n

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\u201cThe investigations uncovered exceptionally serious dangers\u201d<\/p>\n<\/div>\n<\/div>\n

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\u201cThe investigations uncovered exceptionally serious dangers and potentially unlawful conduct from Character.AI, particularly its treatment of children, including chatbots posing as licensed professionals, exposure to sexual and violent content, weak age checks, misleading safety claims, and potential violations of state privacy laws,\u201d according to a press release from James\u2019 office. The states were working to address these issues with Character.AI, but didn\u2019t reach an agreement before the company filed for bankruptcy. Character.AI and Disney did not immediately respond to requests for comment.<\/p>\n<\/div>\n

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The states are urging the judge to require the purchaser of Character.AI\u2019s assets to implement procedures that will safeguard the sensitive information the company maintained. Those include effective age-assurance systems, restrictions on how minors can engage with the chatbots, implementing \u201cCrisis safeguards,\u201d and letting users delete their data. \u201cThis company collected some of the most private thoughts children have ever shared, and now those conversations could be sold off to the highest bidder,\u201d James said in a statement. \u201cI am fighting to make sure any buyer puts children\u2019s safety first and puts real protections in place.\u201d<\/p>\n<\/div>\n


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New York Attorney General Letitia James revealed a years-long multi-state investigation against Character.AI as they now seek to require protections on consumer data sold through its bankruptcy proceeding. James is among 40 bipartisan AGs who filed a notice of interest in Character.AI\u2019s bankruptcy case \u201cto put all parties on notice of the regulatory issues that […]<\/p>\n","protected":false},"author":1,"featured_media":8702,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[9],"tags":[31,46,74],"class_list":["post-8701","post","type-post","status-publish","format-standard","has-post-thumbnail","category-gadgets","tag-ai","tag-news","tag-policy"],"yoast_head":"\nNow that Character.AI is going bankrupt, what happens to all of its users\u2019 data? - Silvybrand Lifestyle Blog<\/title>\n<meta name=\"description\" content=\"Several states had been working to reach an agreement with Character.AI to resolve consumer protection concerns when it filed for bankruptcy, a new filing says.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/silvybrand.com\/?p=8701\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Now that Character.AI is going bankrupt, what happens to all of its users\u2019 data? 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