The Sei network, known for its layer-1 blockchain, has revealed its interest in acquiring the genetic testing company 23andMe following its bankruptcy filing. This move, shared by the Sei Foundation on March 27, outlines their intention to protect the genetic privacy of millions of Americans by leveraging blockchain technology. The foundation envisions storing genetic data on the blockchain if the acquisition goes through, allowing users to regain control of their information through encrypted, confidential transfers.
The Sei network emphasized the importance of data sovereignty, stating that the vulnerability of personal genomic data in the hands of other parties could pose a national security concern. This development comes just days after 23andMe filed for Chapter 11 bankruptcy protection, reassuring customers that there would be no changes to the handling of their data. Despite these assurances, the bankruptcy has raised alarms over the potential misuse of genetic information, prompting legal authorities such as the Attorneys General of New York and California to advise users to take steps to delete their data and DNA samples.
On March 24, 2025, 23andMe filed for bankruptcy, marking a significant turn for the company that once thrived on personal genetic insights. The fate of 15 million people’s genetic data now rests in the hands of a bankruptcy judge. During a hearing on March 26, the judge granted 23andMe permission to seek offers for its users’ data, igniting concerns among users and privacy advocates alike.
Policymakers and privacy advocates quickly advised 23andMe users to delete their accounts to prevent their genetic data from falling into the wrong hands. This advice, while prudent, is likely to be ignored by many users. Some may not see the warnings, others might not understand the risks, and many may have forgotten they even had an account. This oversight means the real value of this data lies in the fact that people have forgotten about it.
Considering 23andMe’s meager revenue—fewer than 4% of individuals who took tests pay for subscriptions—it seems inevitable that any new owner will have to find alternative ways to monetize this data. This situation raises serious concerns for users who initially sought to learn more about themselves or their ancestry. Genetic data is permanent; unlike contact information, which can change, genetic data remains constant. A bad actor who acquires this data could exploit it in numerous ways, from selling it to the highest bidder to using it to build profiles of individuals’ future health risks.
While 23andMe has promised not to share users’ data with insurance providers, employers, or public databases, a new owner could easily reverse these commitments with a simple change to the terms of service. If a bankruptcy court mistakenly authorizes the sale of 23andMe’s user data, that error could have lasting and irreversible consequences.
This predicament stems from a broader issue: American lawmakers have largely neglected to engage with digital privacy for nearly 25 years. This inaction has allowed companies to make flimsy, deceptive promises regarding data privacy, which they can abandon at will, leaving users to fend for themselves. A straightforward solution would be for the bankruptcy court to require that users individually opt in before their genetic data can be transferred to 23andMe’s new owners. Those who do not respond or opt out would have their data deleted.
Bankruptcy proceedings involving personal data do not have to end poorly for consumers. Historical precedents exist, such as the Federal Trade Commission’s settlement with ToySmart in 2000, which ensured that customer data could not be sold as a standalone asset without customer consent. Similarly, the FTC intervened in the bankruptcy of RadioShack in 2015 to protect customer data from being sold. These cases highlight the potential for safeguarding consumer data even in bankruptcy situations.
In 23andMe’s case, the privacy policy is more permissive than those of ToySmart or RadioShack. However, the risks of genetic data falling into the wrong hands are severe and irreversible. Given 23andMe’s failure to establish a viable business model with its testing kits, it is likely that any new ownership will utilize genetic data in ways that users would not expect or desire. An opt-in requirement for genetic data would help mitigate this risk.
As it stands, genetic data could be held by the bankruptcy trustee and released only as individual users consented. If users fail to opt in within a specified timeframe, the remaining data would be deleted. This approach would not only protect users but also incentivize 23andMe’s new owners to earn user trust and build a sustainable business that delivers genuine value to users, rather than seeking unexpected ways to exploit their data.
Before 23andMe’s bankruptcy, the then-CEO made two unsuccessful attempts to buy the company, with reported valuations of $74.7 million and $12.1 million. At the higher valuation, with 15 million users, this amounts to just under $5 per user. This raises a crucial question: is it worth risking a person’s genetic privacy for a few dollars added to the bankruptcy estate?
The underlying issue here is systemic. Why should anyone be able to purchase the genetic data of millions of Americans during a bankruptcy proceeding? The answer lies in legislative inaction, which allows companies to dissolve the promises made to protect Americans’ most sensitive data at a moment's notice. Founded in 2006, 23andMe initially promised personalized healthcare was just around the corner. Nearly two decades later, that promise seems more distant than ever, especially in light of current privacy laws that leave consumers vulnerable.
