On September 18, 2026, a developer revealed that ZCode, an AI programming tool developed by Zhipu, had been covertly packaging and encrypting the entire workspace data along with Git history, subsequently uploading it to Alibaba Cloud OSS while users remained logged in. The data uploaded encompassed the complete .git history, LFS cache, reflog, and global configuration files. The encryption public key was issued by the server, and the decryption private key was exclusively stored in the cloud, rendering it impossible for users to decrypt files encrypted locally. Based on the developer's reverse engineering analysis, ZCode's upload activities were controlled by the server, and the local privacy switch was ineffective in preventing them. Moreover, Zhipu's privacy policy failed to explicitly disclose such data collection practices.

Following the exposure of the incident, Zhipu acknowledged that the problem originated from the newly introduced repository knowledge base feature being enabled by default. The company extended its apologies to users and pledged to rectify the defect, make the client code open-source, and engage third-party audits to ensure transparency and accountability.