Weekend story
How one cyber breach turned a genetics giant to dust, and left millions of customers helpless
Genetic testing company 23andMe, which led the DNA revolution for private consumers, has become a resounding cautionary tale.
The breach, which started as another regular cyberattack, turned into a legal and economic tsunami, leading to a complete collapse.
What happened? In late 2023, a hacker breached the company's systems and stole sensitive information from 7 million customers, including genetic and personal data.
This was not just another standard password theft; this is information that tells who you are down to your DNA level.
This led to a wave of lawsuits and investigations from all sides: 40 class-action lawsuits from angry customers. An additional 35,000 customers contacted or threatened arbitration proceedings. The FTC (Federal Trade Commission) opened an official investigation. 42 attorneys general from 42 US states joined the legal pursuit. 12 international regulators, including Canada and the UK, launched a joint investigation.
The cost of the breach, more than the company could absorb: The company paid over $30 million to settle some of the lawsuits, but it was a futile effort. The investigations, arbitrations, and lawsuits dragged 23andMe down until it eventually filed for bankruptcy.
The most disturbing part: In bankruptcy, the liquidator sells all assets to pay creditors.
What is 23andMe's main asset?
The genetic data of millions of customers!
Yes, there's a chance your DNA will become an asset on the open market.
The story of 23andMe is a frightening cautionary tale.
One cyberattack managed not only to bring down a giant company but also to turn personal genetic information, the most precious information to us as humans, into a commodity on the shelf.
What is our insight as investors from this rather crazy story?
Sometimes a small change that doesn't seem very significant can certainly bring an entire company to its knees.
Note this
When investing in a stock, you must follow the news, because sometimes a seemingly minor scenario takes a sharp turn, and the results can be critical.