Attorney General Eric Schneiderman has hit Airbnb with a subpoena for data on its 225,000 New York users.

This is the latest development in an ongoing legal battle Airbnb has faced in NYC. 

“You might have seen news reports about a subpoena from the Office of the New York Attorney General demanding data about all Airbnb hosts in New York,” David Hantman, the company’s head of global public policy, said in a blog post. ”The vast majority of these hosts are everyday New Yorkers who occasionally share the home in which they live. We always want to work with governments to make the Airbnb community stronger, but at this point, this demand is unreasonably broad and we will fight it with everything we’ve got.”

It is technically illegal for New Yorkers to rent out any portion of their apartment or home unless they own it. This runs counter to Airbnb’s business model. The company operates a peer-to-peer marketplace where people can rent out their homes to strangers in exchange for a negotiated rate.

Despite regulatory ambiguity, Airbnb has thrived and spread all over the world. for renting out a room in his apartment. Had the case gone the other way, it would have sent up red flags to landlords that they should evict tenants who are on the site, and signaled that Airbnb’s model is illegal.

New York law is complicated and confusing, and so Airbnb’s CEO and founder Brian Chesky decided to be proactive and outline a three-point plan that would allow the company to continue operating aboveboard.

First, he wants an environment where hosts feel comfortable renting out their rooms without worrying about being dubbed an “illegal hotel.” If they are allowed to do so, Chesky said he supports paying hotel occupancy tax. Third, Chesky said the company is eager to work with New York to remove “bad actors” in the community and will create an 24/7 Neighbor Hotline for complaints.

User data is a sensitive issue, and one that has been widely debated and discussed in the wake of revelations about the NSA’s surveillance programs. Tech companies realize that keeping user data secure is important, but they don’t always have a choice.

“As these conversations continue, we will always be committed to protecting our hosts’ privacy and we will always stand by the hosts who are the heart and soul of this community,” Hantman said.

One of the challenges of disrupting highly-regulated, entrenched industries with new, unregulated, peer-to-peer approaches is that local governments freak out. Comparable battles are also happening with ride sharing services like Uber, SideCar, and Lyft, which are also  whose policies weren’t created to regulate crowdsourced services.

Lawmakers and local regulators say that the lack of regulation brings up serious safety concerns and creates a financial imbalance, because the traditional players (like hotel owners and taxis drivers) have to pay taxes and purchase commercial insurance policies whereas the sharing economy startups don’t — yet.

Almost all of these issues result from the fact that regulations and policies weren’t written to accommodate platforms like these. These startups and governments from New York to California are figuring it step-by-step in an on-going chess match.

And just when it seemed like some progress had been made, at least for Airbnb with New York City, they are put in check with a subpoena.

Your move, Airbnb.