According to CoinMeta, Character.AI was valued at $1 billion before going bankrupt, but now Disney is only offering $20 million to acquire some of its technology. The company attracted millions of users in 2023 and became one of the most promising startups in Silicon Valley. However, on October 12, 2026, it filed for bankruptcy protection due to financial, legal, and operational difficulties. The financial problems of Character.AI worsened, and despite retaining about 12 million users, it still incurred losses of around $8 to $9 million per month. The company is facing legal lawsuits accusing its chatbot interactions of potentially harming young users.