“This also means that your credentials must be forwarded to Cursor’s servers, allowing them to collect data on your inferences and codebase.”
Cursor will not talk to a local model gateway. Every request, your API key included, goes through Cursor’s servers first. The system prompt also passes along your OS version, workspace path and shell, and tells the model never to mention the cheaper model that applies its edits. Bring your own key still means Cursor sees everything.