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40 State AGs Intervene in Character.AI Bankruptcy Over User Data Protections

New York Attorney General Letitia James has revealed a multi-state investigation into Character.AI, with 40 bipartisan attorneys general filing a notice of interest in the company's Chapter 11 bankruptcy case. The AGs want consumer data protections addressed in any sale or transfer of assets. Character.AI announced it was filing for Chapter 11 and selling some assets to Disney.

The Verge AI3d agoScore 75
AI regulationdata privacyCharacter.AI
Industry

Disney offers $20M for Character.AI’s scandal-plagued chatbot tech

Disney has offered $20 million for a non-exclusive perpetual license to certain Character Technologies intellectual property in a bankruptcy proceeding, according to a Character.AI press release. The offer covers technology powering the controversial chatbot Character.AI, though the release did not specify which assets Disney wants. The move follows Disney’s September 2025 cease-and-desist letter accusing Character Technologies of misusing Disney characters and harming children.

Ars Technica AI4d agoScore 72
DisneyCharacter.AIbankruptcy