Payy has responded to security concerns regarding its claims process requiring users to submit seed phrases, stating the information is used exclusively to verify USDC balances and not to control assets. The platform explained that its ZK privacy architecture prevents balance confirmation without user credentials, necessitating seed phrases alongside ID verification to prevent fraudulent claims. The company cited known and potential vulnerabilities in Aztec’s zero-knowledge proof framework as the reason it cannot rely solely on ZK proofs for balance validation. Payy noted that because all on-chain funds were previously stolen, the submitted seed phrases no longer hold asset control value and serve only to identify historical USDC holdings. While acknowledging the process is not ideal, Payy maintains it is currently necessary to ensure accurate compensation distribution.