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YC claims the code stays on the machine but uploads source code; the local AI analysis tool Paxel was immediately exposed by the community upon launch.

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According to Beating Monitoring, Y Combinator has launched a free AI code analysis tool called Paxel, claiming that the code “will never leave your machine.” But a few hours after its release, the security community exposed the false advertising of “local operation” through reverse engineering. The reverse analysis shows that Paxel actually frequently sends sensitive data externally. The contents of files read by developers, modified code, and prompts pasted into input boxes are uploaded to the large language model proxy endpoint. Local file paths, the Bash commands executed in the terminal, and the usernames and email addresses in the local Git configuration are also transmitted to Y Combinator’s servers. Sentry error monitoring is enabled by default, continuously sending out the number of local code lines and Git commit history. The developer community generally mocks the so-called local analysis as locking the door and then mailing the key to a third party, and criticizes the localized marketing as genuine “privacy whitewashing.”
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