Claude transmits all prompts back to HQ as a part of its basic functionality.

If you are using an AI system to read your codebase from your local folder and make changes, whether or not you have a VM running or not is inconsequential. The Claude extension and/or CLI doesn’t need a VM to send code back to the mothership, you’re already running an executable program and granting it directory access.

Whether you trust a company as a vendor is typically based on their privacy policy, EULA, and your contract with them (if applicable). Those are the bits that have legal enforceability.