A unique service offering to unlock any GSM iPhone, no jailbreaks required, has suddenly shut down, leaving many customers awaiting refunds. Increased scrutiny from Apple may very well be responsible… and curiously, even the providers of the service had no idea how it worked, or why it’s all stopped.

Last week, we reported on CutYourSim, a company that offered permanent unlocking of any GSM iPhone for a one-time fee of $169.99. All a customer had to do was provide their iPhone’s official IMEI# — a serial number used to identify a handset to a cellular network, and often needed for remote unlockings of other cell phones — to CutYourSim and within a week or two, they promised your iPhone would receive confirmation that it had been unlocked, and could now be used on any GSM network.

The service worked: in just a little under a week, CutYourSim performed over 400 unlocks for customers. But now CutYourSim has suddenly canceled the service, and while they’ve begun issuing refunds, the money of an unknown number of customers who paid for an unlock is currently stuck in limbo.

What happened? Even a representative of CutYourSim doesn’t know.

“Unfortunately, we were not able to complete the rest of the unlocks waiting in our queue due to our suppliers being unable to offer the service anymore,” CutYourSim told Cult of Mac. “Our suppliers have told us that there is a possibility that the service may return, but they do not know when, so we have decided to start processing refunds for any orders that we were not able to complete.”

But who is this mysterious “supplier” who suddenly stopped providing the service to CutYourSim? And why did everything stop working? Again, CutYourSim doesn’t know!

“To tell you the truth, first our supplier told us there were server issues, then after that they just told us that they will not be offering the service anymore. We are not sure where the service comes from, or whether it’s a contact through AT&T or Apple. We do know that the service is performed in the UK, but that’s about it.”

In other words, CutYourSim’s iPhone unlocking service was as much of a black box to them as it was to customers. They would throw an iPhone into one end, wait for the light to go on, then pull it out, carrier unlocked. No one knew how it worked, but it did.

The problem with black boxes, though, is that when they break, no one knows how to fix them… or even what’s wrong with it in the first place.

Even so, it’s easy to hazard a guess as to how the service worked… and why it met with such a quick demise.

Although it doesn’t happen often in the States, when Apple or AT&T does carrier unlock an iPhone, they do so by entering that iPhone’s IMEI number into a “whitelist” database that allows that phone from then on to work on any compatible network.

CutYourSim’s contact clearly had access to that database, making that contact either an official Apple employee or, more likely, someone with access to that database in one of the United Kingdom’s five official iPhone carriers: O2, Vodafone, 3 Network, Tesco Mobile and Orange.

Either way, it seems clear that CutYourSim’s access to the service was cut-off because of increased scrutiny by Apple of the IMEI numbers being entered into their whitelist database, sparked by the massive publicity CutYourSim’s received after they began offering iPhone unlocks last week.

For customers waiting for their carrier unlock from CutYourSim, they may very well be out of luck. “For all I know, the service may come back online in a few days, but at this point when we ask our supplier about it, they say they do not know when it will come back… if it ever does,” CutYourSim told Cult of Mac.

CutYourSim has already issued full refunds to users who paid through PayPal but did not receive an unlock. The situation has become more complicated for users who purchased an unlock through Google Checkout, as CutYourSim’s merchant account was closed due to “multiple recent refunds.” CutYourSim believes that Google will begin to issue refunds for any order not marked as “Delivered/Completed” shortly, but the exact timetable is unknown.

The whole debacle would seem to serve as a lesson to CutYourSim about selling a product they don’t fully control, but on their part, CutYourSim remains undaunted: instead of a universal unlock, they soon plan to start selling a more limited unlocking service to iPhone customers with handsets locked to a specific range of carriers. Caveat emptor.