Payy said seed phrases submitted in its claims form are used only to verify users' wallet balances and will not be used to control assets. Users had raised security concerns because the claims process required seed phrases. Payy said its privacy architecture prevents the platform from confirming users' USDC balances without seed phrases. Payy said all of its on-chain funds have been stolen, so Payy seed phrases no longer have value for controlling funds. Payy acknowledged that the process is not ideal but said it currently ensures accurate asset compensation.