The British data analysis company, hired by the 2016 Trump campaign, said the source of the accusations -- which it called "a former contractor" -- was "misrepresenting himself and the company".
"This Facebook data was not used by Cambridge Analytica as part of the services it provided to the Donald Trump presidential campaign; personality targeted advertising was not carried out for this client either," it said in a statement.
According to a joint investigation by The New York Times and Britain's Observer, the firm was able to create psychological profiles on 50 million Facebook users through a personality prediction app that was downloaded by 270,000 people but also scooped up data from friends.
Facebook has responded by suspending Cambridge Analytica's account and pledging to probe the allegations, but has pushed back against the claim of a major breach, suggesting misused data was limited to a far smaller group of users.
Its share price plunged on Monday, as officials on both sides of the Atlantic called for investigations.
Elizabeth Denham, Britain's Information Commissioner who regulates the sector in the country, announced her office would seek a court warrant on Tuesday to search Cambridge Analytica's computer servers.
She said the company had been "uncooperative" to requests for access to its records and missed a Monday deadline stipulated.
"The information commissioner is seeking a warrant to obtain information and access to systems and evidence related to her investigation," Denham's office said in a statement.
It added Facebook had agreed to "stand down" from its own search of the company's London premises "at the information commissioner's request".
"Such a search would potentially compromise a regulatory investigation," the statement said.
'Horrifying, if confirmed'
Vera Jourova, the European commissioner for justice, consumers and gender equality, called the revelations "horrifying, if confirmed," and vowed to address concerns in the United States this week.
In Britain, parliamentary committee chair Damian Collins said both Cambridge Analytica and Facebook had questions to answer.
"We have repeatedly asked Facebook about how companies acquire and hold on to user data from their site, and in particular whether data had been taken from people without their consent," Collins said in a statement.
"Their answers have consistently understated this risk, and have also been misleading to the committee."
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'Systemic problems'
On Wall Street, Facebook shares skidded 6.8 percent amid concerns about pressure for new regulations that could hurt its business model.
Brian Wieser at Pivotal Research said the revelations highlight "systemic problems at Facebook," but that they won't immediately impact the social network's revenues.
Still, he said, "risks are now enhanced" because of the potential for regulations on how Facebook uses data for advertising and monitoring users.
Meanwhile, fresh allegations against senior executives at Cambridge Analytica emerged on Monday evening.
The company's chief executive Alexander Nix was secretly filmed by Britain's Channel 4 News saying it could entrap politicians in compromising situations with bribes and sex workers, using ex-spies to dig up dirt on opponents.
He also said the firm secretly campaigns in elections around the world, including by operating through a web of shadowy front companies, or by using sub-contractors.
A Cambridge Analytica spokesman told the news programme it does not use "untrue material for any purpose".
"We entirely refute any allegation that Cambridge Analytica or any of its affiliates use entrapment, bribes, or so-called 'honey-traps' for any purpose whatsoever," the spokesman added.
'Self-regulation not working'
Jennifer Grygiel, a Syracuse University professor who studies social media, said the disclosures will increase pressure to regulate Facebook and other social media firms, already under scrutiny for allowing disinformation from Russian-directed sources to propagate.
"Self-regulation is not working," Grygiel said.
"I'm wondering how bad this needs to get before our regulators step in and hold these companies accountable."
Daniel Kreiss, a professor of media and communications at the University of North Carolina, said Facebook failed to live up to its responsibilities on election ads.
"The fact that Facebook seems to make no distinction between selling sneakers and selling a presidential platform is a deep problem," Kreiss said.
Some analysts suggested the breach posed an existential crisis for Facebook because of how it gathers and uses data on its two billion members.
David Carroll, a media professor at the New School's Parsons School of Design, said Facebook and others will soon be forced to live with new privacy rules such as those set to take effect in the European Union.
"Facebook and Google will have to ask users a lot more permission to track them," Carroll said. "Most people are going to say no, so I think it's going to have a huge impact on these companies."
Carroll has filed a legal action in Britain calling on Cambridge Analytica to disclose what data was gathered and used on him.
"If I can get them to disclose my data or my personality score, it indicates every other American has the right to the same thing," he said.
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