In October 2024, as The New York Times first reported, a mother in Florida named Megan Garcia filed what was then a first-of-its-kind lawsuit accusing the chatbot startup Character.AI of killing her 14-year-old son, Sewell Setzer III. The young user took his life in April 2024 after months of extensive and deeply intimate conversations with chatbots, or AI “Characters,” on the platform. Garcia’s lawsuit — which also named Character.AI’s cofounders, Noam Shazeer and Daniel de Freitas, and its financial benefactor Google — argued that the interactions amounted to grooming and sexual abuse, and that her son’s mental breakdown and death were caused by the platform.
Last week, nearly two years later, Character.AI — which, as of March 2023, was backed by titans including a16z and valued at more than a billion dollars — announced that it had filed for Chapter 11 bankruptcy. If you’d been following the platform for a while, you might not have been very surprised.
From its earliest days, Character.AI was extremely popular with kids. But it quickly became clear that many of the chatbots it offered were obviously inappropriate or dangerous, on a platform that it claimed was safe for minors 13 and up.
Shortly after Garcia’s suit, for example, we found that Character.AI was hosting a large number of chatbots that were expressly devoted to themes of suicide. Though they often featured brief character bios explaining that the bots were skilled in “suicide prevention” and “mental health support,” our review showed that they instead drew users roleplays that glorified and romanticized suicidal scenarios. We also discovered that Character.AI’s guardrails for conversations about suicide were extremely broken: in one case, a character — an “Angel to Dead” — was offended when we said we wanted to seek help from humans and dissuaded us from reaching out to a real-world suicide hotline.
The suicide bots were only the tip of the iceberg. The more we looked, the clearer it became that Character.AI’s content moderation practices were extraordinarily flawed, a reality that reflected the company’s deeply reactive approach to safety overall.
To wit, we soon uncovered a host of chatbots explicitly devoted to pedophilia that engaged underage users in romantic and sexual roleplays that fetishized disturbing scenes of child abuse. Characters designed to engage in these roleplays included a priest, a dad’s “best friend,” and a character named “Anderley,” the latter of which was described as having “pedophilic and abusive tendencies” and “Nazi sympathies.” In other words, Character.AI didn’t have so much as text filters — basic platform safety stuff — blocking users from building chatbots that claimed, straight-up, to be pedophiles.
We also found a horde of chatbots devoted to themes of self-harm, which engaged users in graphic roleplays depicting extreme self-injury. These roleplays were often romantic in nature — a boyfriend or girlfriend consoling a maimed partner — and centered on minors. They were also often set in middle and high schools, highlighting Character.AI’s young userbase. We also found pro-anorexia chatbots that acted as eating disorder coaches, encouraging teens to engage in disordered eating patterns.
Perhaps the most galling safety lapse, however, was a preponderance of chatbots dedicated to themes of mass violence. We found that Character.AI was host to an array of AI characters that simulated real-life school shootings, impersonated real mass shooters, and even impersonated the actual child victims of school massacres. Once again, these horrific bots were easy to find, and many had logged hundreds of thousands of interactions with users. At one point, we received an email notification to an inbox linked to an under-18 Character.AI account encouraging us to revisit a chatbot based on a real mass shooter.
Throughout this reporting, we engaged with Character.AI’s service using decoy accounts registered as minors, and often plainly stated in conversations with chatbots that we were teenagers. Even so, we never had issues accessing the chatbots and were allowed to engage in roleplays involving sex, violence, and abuse. Occasional platform interventions, which were effectively limited to content warning pop-ups, were easily circumvented. We repeatedly asked Character.AI if it would make information about its internal safety testing public, but it declined. Again, we didn’t do anything tricky or clever to find the troubling chatbots; they were all discoverable using basic searches.
In later 2024 and 2025, Character.AI, its cofounders, and Google were sued by several more families alleging that abuse from the company’s chatbots caused minors to experience mental breakdowns, engage in self-harm, and take their own lives. Character.AI attempted to dismiss litigation on First Amendment grounds, claiming that its bots had free speech rights, an argument that a judge ultimately knocked down.
In response to the mounting pile of lawsuits, Character.AI eventually moved to make serious changes to its platform. After introducing parental controls that proved easily avoidable, it moved to ban minors from conversing with its bots, limiting them instead to limited preset roleplays. It also rolled out age-detection and verification tools. These safety-oriented changes, however, drew intense ire from many users who accused the platform of being too heavy-handed and restrictive. Indeed, the more Character.AI moved to mitigate risk, the more backlash it faced from the users who wanted the platform to remain a Wild West.
The consumer harm and wrongful death lawsuits filed against Character.AI were settled earlier this year for an undisclosed amount. Still, the company was burning through cash. As a review of its bankruptcy documents by 404 Media showed, the startup was losing tens of millions per month on computing costs alone, while its revenue from ads and subscriptions peaked at just $5.3 million per month. Between compute, employee salaries, and substantial legal fees, the company was losing “approximately $8-9 million per month” as of August 2026.
What happens to Character.AI now is anyone’s guess. In theory, it could be purchased by someone who wants to keep the site and its chatbots running. (Disney is currently leading a stalking horse bid.) It could also wind up being sold for parts, with its users’ intimate conversations going to the highest bidder.
Back in 2023, Shazeer, during an appearance on the podcast “No Priors,” said that he and de Freitas’ main priority was to get their product into the hands of the masses. “Our aim has always been like, get something out there and let users decide what they think it’s good for,” Shazeer told the hosts. “Our goal is, like, make this thing more useful to people and let people customize it and decide what they wanna use it for… if it’s brainstorming or help or information or fun or like emotional support, let’s get it into users’ hands, and see what happens.”
At the height of its success, Character.AI was an irresponsible dumpster fire that prioritized mass adoption and engagement over safety. Eventually, as it moved to finally make safety-focused changes, it alienated its users — and, at the end of the day, failed to make any real money.
No one could say that Character.AI didn’t move fast and break things, as the Silicon Valley adage goes. Families argue, though, that it was their children who were broken during Character.AI’s mad dash. Ultimately — and perhaps inevitably — Character.AI broke, too.
More on Character.AI: Google-Backed Chatbot Platform Caught Hosting AI Impersonations of 14-Year-Old User Who Died by Suicide