A Petals dev here. Indeed, the public swarm should not be used for any kind of sensitive data (we have warnings about that in the instructions). If someone wants to process such data, we recommend to set up a private swarm among the orgs they trust (e.g., a couple of labs/small companies who don't have many GPUs themselves may set up a private swarm and collaborate to process their datasets).

Regarding homomorphic encryption (HE), I'm afraid the current methods to run neural networks in the HE fashion involve 10-100x slowdown, since they are mostly not designed for floating-point operations. We'd love to find a way to do it faster though, since privacy is obviously an important issue for many tasks.