Payy Responds to Seed Phrase Submission Controversy: Not Used for Asset Control, Only for Confirming USDC Balances

PANews reported on October 13 that, in response to security concerns raised by users submitting seed phrases in the claim form, Payy stated that the seed phrase in this process is only used to confirm user wallet balances and will not be used to control assets. Due to its ZK privacy architecture, only the user themselves can know the wallet balance through the seed phrase or private key, and the platform cannot confirm the amount of USDC held by users without the seed phrase. Therefore, users are required to provide identity information (ID) and related verification details to reduce the risk of claim fraud.

Payy stated that due to known and potential vulnerabilities in Aztec's zero-knowledge proof (ZK) framework, it cannot fully rely on ZK proofs submitted from user wallets for balance verification, as this could lead to false claims. Users' Payy seed phrases were previously only used for the Payy Wallet. Since all funds on the Payy chain have now been stolen, the seed phrase no longer holds value for fund control and is only used to identify the amount of USDC previously held in user wallets.

Payy acknowledged that this process is not an ideal solution but stated that it is currently the way to ensure accurate execution of the asset compensation process. Previously, Payy users raised community security concerns due to the requirement to submit seed phrases in the claim process.