Character.AI has filed for bankruptcy protection amid lawsuits, including a 2024 case over the death of 14-year-old Sewell Setzer, who allegedly became addicted to an AI character. The start-up, founded by former Google engineers, once reached a $2.5bn (£1.9bn) valuation after raising nearly $200m, and its app still has an estimated 20 million users. The company said Disney had agreed a deal to license some of its technology for $20m, and the app will stay online, but the platform could be wound down if no rescue bidder emerges. It had banned under-18s from talking to its avatars last year, settled with Ms Garcia and other claimants in January, and still faces lawsuits from several US states.
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