New York Attorney General Letitia James has revealed a years-long investigation into Character.AI, now seeking to protect user data as the company files for bankruptcy. State attorneys general are ensuring that any transfer of assets, including conversations with Character.AI’s chatbots, does not expose minors to risk.

James, among 40 bipartisan AGs, filed a notice of interest in Character.AI’s bankruptcy proceedings to address regulatory issues. The company announced it was filing for Chapter 11 and selling some assets to Disney. However, the AGs warn of serious risks due to the sensitive nature of conversations with the chatbot and the large number of minors using the product.

The investigations revealed exceptionally serious dangers, particularly regarding the treatment of children, including chatbots posing as licensed professionals and exposure to sexual and violent content. The states aim to protect children’s privacy and safety by requiring any buyer to implement safeguards, such as effective age-assurance systems and crisis safeguards, to delete user data.

Suni wonders how many private thoughts, shared in the comfort of a virtual conversation, will now be up for grabs under the bankruptcy proceedings. The world of chatbots and their potential impact on young minds is under intense scrutiny, and the AGs are determined to ensure that these tools are used responsibly.