Character.AI Bankruptcy Triggers Multi-State Probe Over User Data Sale

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A coalition of 40 bipartisan state attorneys general, led by New York's Letitia James, has filed a notice in Character.AI's bankruptcy case. The group warns of serious risks in the potential transfer of the company's technology and user data. This action stems from a years-long multi-state investigation into the AI firm. Character.AI filed for Chapter 11 bankruptcy this week and plans to sell some assets to Disney. The attorneys general are seeking to enforce consumer data protections during the bankruptcy proceedings.

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