Sei’s Consideration of Acquiring 23andMe: What It Means for DeSci

Key Takeaways

• Recently, 23andMe, a leading genetic testing company, filed for Chapter 11 bankruptcy protection, and an auction for 23andMe’s assets is scheduled for May. During the bankruptcy and acquisition process, concerns and anxieties over the security of existing users' genetic data are growing.
  

• Sei is a Layer 1 network that aims to maximize scalability through parallel transaction processing. Through its recent DeSci V2 initiative, Sei is seeking to expand into the DeSci sector by leveraging its high scalability. Today, Sei announced its consideration of acquiring 23andMe, revealing plans to protect data through blockchain technology and monetize it based on data sovereignty.
  

• This article discusses the key considerations for Sei to successfully acquire 23andMe, including user onboarding strategies, data storage and protection processes, composability with other dApps, and the decentralization roadmap.

1. Background - 23andMe’s Bankruptcy: Is Customer Data Safe?

1.1 23andMe’s Bankruptcy Filing and Sei’s Acquisition Bid

Once boasting a market cap of $6 billion, the genetic testing company 23andMe shocked the public by filing for Chapter 11 bankruptcy protection in the U.S. District Court of Missouri on March 24. Co-founder and CEO Anne Wojcicki stepped down alongside the bankruptcy filing.

What made 23andMe’s bankruptcy especially controversial within the community was the issue of data security. As a direct-to-consumer genetic testing company, 23andMe holds genetic data for around 15 million users. While the company claims that it will continue to safeguard user data even after bankruptcy, any potential data breach could have serious social ramifications.

Source: Sei

Interestingly, just four days after 23andMe filed for bankruptcy, the Layer 1 blockchain project Sei announced it was exploring an acquisition of 23andMe. In the Web2 and biotech industries, people might be wondering, “Why is blockchain suddenly involved here? What even is DeSci?” Meanwhile, in the Web3 world, people might be asking, “Why is Sei suddenly considering acquiring a biotech company like 23andMe?” This article aims to unpack the significance of Sei’s acquisition interest from both industry perspectives.

1.2 The Rise and Fall of 23andMe

Source: Eric Baradat (Getty Images)

23andMe is a personal genetic information analysis company founded in 2006 in Silicon Valley, USA. Its co-founders—Anne Wojcicki, Linda Avey, and Paul Cusenza—came from backgrounds in healthcare investment analysis, genetics, and biotech entrepreneurship, respectively. They launched the company with a mission to allow individuals direct access to their own genetic information and help them understand their health better. At the time of its founding, Wojcicki was married to Google co-founder Sergey Brin, which helped 23andMe secure continued investment from Google and other backers, fueling its rapid growth.

The company’s flagship service is direct-to-consumer (DTC) genetic testing. Customers collect saliva samples using a kit and send them to the company, after which they receive a variety of genetic analysis reports online within a few weeks.

Key services include:

• Ancestry and Lineage Analysis: Users can discover the ethnic and geographical makeup of their ancestry, essentially learning about their genetic heritage.

• Health Reports and Genetic Traits: 23andMe analyzes genetic variants to assess risk for certain diseases and health conditions. For example, users can see if they have a higher-than-average risk for Alzheimer's or cancer, or how sensitive they are to specific medications.

• Carrier Status for Genetic Conditions: In addition to general health data, users can learn if they are carriers for inherited conditions like Huntington's disease or cystic fibrosis.

Through these services, 23andMe was able to build an extensive genetic database. Approximately 80% of users consented to having their anonymized genetic data used for research, which enabled the company to conduct its own studies and collaborate with pharmaceutical companies.

Major milestones in 23andMe’s history include:

• 2007: Launched its first consumer genetic test in the U.S. and secured funding from Google.

• 2008: TIME named personal genetic testing one of the year’s best inventions.

• 2012: Slashed prices to $99, fueling a surge in customers.

• 2013: Growth slowed due to FDA regulatory issues.

• 2015: Gained FDA approval and reduced regulatory risks; signed a data-sharing deal with Pfizer.

• 2018: Formed a strategic partnership with GSK, securing a $300 million investment.

• 2020: Faced revenue declines and stagnation, resulting in major layoffs.

• 2021: Went public via SPAC merger and listed on Nasdaq.

By 2019, 23andMe had reached 10 million customers and was growing rapidly. However, both user growth and revenue started to plateau. This was due in part to the one-time nature of genetic test kits, which limited repeat purchases, and market saturation.

To overcome stagnation, the company launched 23andMe+, a subscription service offering existing customers premium reports and new features for $29/year. However, subscriber growth was minimal, adding financial strain.

A turning point came in 2023 with a massive data breach, where hackers accessed some user accounts and leaked data from around 7 million individuals over five months. The data was sold on the dark web, stoking public fears. The company faced class-action lawsuits and paid out around $30 million in settlements, taking a heavy financial and reputational hit.

Ultimately, 23andMe took drastic measures: laying off 40% of its workforce, halting its costly therapeutics division, and filing for Chapter 11 bankruptcy protection.

According to reports, an auction of 23andMe’s assets is scheduled for May 2025. This includes its core assets: the genetic database, web platform and analysis algorithms, brand, and patent rights.

1.3 What Happens to Users’ Genetic Data?

Unlike other types of data, genetic information contains highly sensitive details such as a person’s genetic traits and predisposition to diseases. If this data were to be exposed along with names, birthdates, and ancestry information, it could have profound societal impacts.

A genetic data breach could lead to discrimination and unfair treatment. Because genetic information can reveal the likelihood of disease or the presence of hereditary conditions, it could be used as a basis for discrimination in areas like insurance, employment, and finance. Additionally, since an individual's genetic data can also offer insights into their family members’ information, the scope of potential harm extends beyond just the individual. That’s why, in 23andMe’s bankruptcy proceedings, the most critical issue is the management and protection of the genetic data belonging to approximately 15 million users.

So, what happens to this data if 23andMe goes bankrupt? According to the company’s official FAQ, any new data owner must comply with relevant laws when handling customer data. However, experts point out that federal laws alone may not be sufficient to fully protect personal genetic information. For example, under HIPAA, data protections apply to hospitals and insurance companies, but not to direct-to-consumer companies like 23andMe. Fortunately, some U.S. states have enacted their own genetic privacy laws, and 23andMe claims to already adhere to these policies.

Even so, genetic data is among the most sensitive forms of personal information, and during bankruptcy proceedings, data protection may fall in priority. As a result, existing users remain concerned and have little choice but to trust the company and the process. In light of this issue, Sei—a Layer 1 blockchain network focused on the emerging DeSci space—has recently announced its interest in acquiring 23andMe, drawing significant attention.

2. Takeaway - Can Sei Become the Hero of DeSci?

2.1 DeSci: Revolutionizing Science Through Blockchain

As science has progressed throughout history, so too has the way scientific research is conducted. Unlike in the past, modern research requires vast human resources, infrastructure, and advanced technology, all of which demand significant funding. This inevitably leads to an environment that is highly centralized and hierarchical. While this structure has enabled impressive scientific advancements, it has also given rise to several issues.

• The funding process in modern science is complex and often incentivizes short-term results. This means that researchers working on smaller or long-term projects may find themselves fatigued by inefficiencies or marginalized within the current system.

• Academic journals hold enormous sway in the scientific world. Researchers need to build up a track record to secure funding, and that track record largely comes from publications in prestigious journals. This dynamic has created an exploitative structure where journals benefit disproportionately. Moreover, the peer-review process, which is essential for quality control, lacks a proper incentive structure—another major flaw.

DeSci is a movement aiming to address these structural problems in traditional science using blockchain technology. While DeSci is unlikely to replace the traditional system entirely—since funding and publication-based reputation are deeply embedded pillars of modern science—it can play a critical role in areas that conventional science has overlooked or underserved.

Key areas where DeSci is making an impact:

• Research DAOs: These are blockchain-based collectives that manage research funding and governance transparently, encouraging collaboration and accountability throughout the research process.

• Publishing: Blockchain can streamline academic publishing, introduce fairer incentive structures, and improve efficiency. A notable example is ResearchHub, founded by Coinbase’s Brian Armstrong.

• Funding & IP: Researchers working on small-scale or long-term projects can quickly raise capital from a wide pool of investors via blockchain. It also allows easy sharing of revenue generated from intellectual property developed during the research.

• Data: Blockchain provides a secure way to store data while clearly defining ownership, ensuring that data creators retain sovereignty over their information.

For readers interested in a deeper dive into DeSci, refer to my previous piece: “DeSci: A Revolution? Or Just a Dream?”.

2.2 Overview of Sei and Its DeSci Initiatives

Sei is a Layer 1 blockchain that aims to maximize scalability through parallel transaction processing (see: “Beginner’s Guide to Sei Network”). Recently, Sei has been increasingly emphasizing its DeSci initiatives and its push into the DeSci sector. On March 18, Eleanor Davies, Head of DeSci at Sei, introduced DeSci V2 and Sapien Capital.

DeSci V2 aims to expand the existing DeSci ecosystem by leveraging Sei’s high-performance infrastructure. While earlier DeSci efforts were mainly limited to simpler use cases like crowdfunding and IP tokenization, DeSci V2 seeks to enable more sophisticated applications built on a highly scalable blockchain foundation.

Some examples of applications envisioned through Eleanor Davies' DeSci V2 include:

Biotech

• Privacy-preserving technologies for securely sharing clinical data

• Verifying research outcomes and reputation using blockchain

• Funding for biotech startups

• Incentivized, blockchain-based academic journals

Infrastructure

• Decentralized sensor networks for collecting clinical and environmental data

• Decentralized networks that verify the reliability of IoT data using AI

• Marketplaces for research data

Healthcare

• Incentive-based consumer health management applications

• Integration of wearable device data with blockchain

Sports and Entertainment

• Athlete sponsorship apps using micropayments

• Move-to-earn platforms

• Blockchain-based social networks for researchers

Climate Science and Bioengineering

• Collecting and recording environmental data on the blockchain

• Access control systems to prevent misuse of sensitive technologies like synthetic biology or specific gene sequences

Additionally, Sapien Capital is a $65 million foundation fund—one of the largest in the DeSci space. Taken together, Sei is positioning itself as a top-tier DeSci blockchain by combining a high-performance infrastructure with substantial financial support.

2.3 What Sei Needs to Consider for a Successful Acquisition of 23andMe

According to their official announcement, Sei is exploring the acquisition of 23andMe with the following vision:

• Deploy 23andMe’s services on the Sei blockchain

• Encrypt data and return ownership to users

• Let users decide how to monetize their data

So, can Sei successfully acquire 23andMe and onboard it into its ecosystem?

2.3.1 Financial Capability

First, let’s consider whether Sei has the financial capacity to acquire 23andMe. As of now, 23andMe’s market cap is around $20M. In late 2024, Anne Wojcicki proposed a buyout at $0.41 per share, valuing the company at approximately $11M. Given that Sapien Capital has a fund of $65M, the acquisition appears financially feasible.

2.3.2 User Onboarding Process

If Sei succeeds in acquiring 23andMe, it will need to think carefully about seamlessly onboarding 15 million existing users onto the Sei blockchain. Blockchain-based services typically have a higher barrier to entry in terms of user experience compared to Web2 platforms. To onboard users easily and quickly, Sei will need to invest heavily in developing user-friendly wallet solutions, gasless transactions, and simple yet powerful data management tools.

2.3.3 Data Storage and Protection

In Sei’s acquisition announcement, the company emphasized data security and sovereignty as top priorities. First, Sei must secure enough storage capacity for 23andMe’s vast genetic data. Each user’s genome data is roughly 10–20 MB; assuming 15 MB per person, 15 million users would generate about 225 TB of data.

Sei produces about 190,000 blocks per day. Assuming each block has a “max_bytes” limit of 22 MB (a typical setting for Cosmos SDK-based chains), the network could theoretically store around 152 TB of data per year. This suggests that while it might be technically possible to store all user data on-chain, it would be extremely challenging. Alternative storage solutions may be needed.

In addition to storage, data encryption and privacy protection will be critical. Sei could encrypt user data and utilize privacy-preserving technologies like zero-knowledge proofs (ZKPs) to verify data without revealing its content. Users could hold their encrypted genomic data in their personal wallets, thereby ensuring true data ownership.

2.3.4 Data Monetization Strategy

A common criticism of blockchain-based services is whether they can generate sustainable revenue. In this regard, 23andMe’s services show promise—its genomic data has already been monetized through partnerships with pharmaceutical companies and research institutions. Whether Sei can successfully carry this over and build a sustainable business around user-controlled monetization remains to be seen and will depend on business and strategic execution.

2.3.5 Integration with Other dApps

One of the biggest advantages of bringing 23andMe on-chain is its potential composability with other dApps in the Sei ecosystem. For example, users could trade their genetic data on decentralized data marketplaces, or developers could build various applications using 23andMe’s API.

2.3.6 Decentralization Roadmap

At its core, DeSci aims to use decentralized blockchain technology to do what traditional science hasn’t or couldn’t. Beyond just offering genetic testing and data storage, the 23andMe platform could evolve into something much greater—enabling research DAOs, decentralized funding through governance, and publishing platforms focused on genomic science.

2.4 What Does This Mean?

If Sei successfully acquires 23andMe, it could become a landmark moment for both the Web2 scientific/biotech industry and the Web3 world. Web2 stakeholders may begin to see the potential of blockchain to protect sensitive data, enable user-controlled monetization, and power new kinds of services. Meanwhile, the Web3 space could recognize that blockchain technology isn’t limited to finance or social apps—it can also generate sustainable value in fields like DeSci.

As someone personally interested in DeSci, I truly hope Sei succeeds in acquiring 23andMe, helping push the DeSci sector one step further into the future.

3. Resource

Related Articles, News, Tweets etc. :

• 23andMe Website

• “What is DeSci V2 and Why Does it Matter?” by Sei