Last week we told you about a new unlock service called CutYourSim that offered a remote, permanent unlock for the iPhone. Instead of the classic method of jailbreaking and installing UltraSn0w, CutYourSim claimed to permanently unlock your iPhone’s baseband remotely for any GSM carrier.

For $169.99, the folks at CutYourSim would be able to unlock your iPhone’s baseband and keep it unlocked forever. Sounds like a dream come true, right?

The dream didn’t last long. CutYourSim has already announced that it is discontinuing its unlock service

“Today we have decided discontinue the service we offered for remotely unlocking any iPhone.  For the customers who already paid, and received their unlocks a few days ago, they do not need to do anything because they made the cutoff for our service.  All customers who paid via PayPal or Google Checkout will be refunded.  Due to the high number of orders we had, please allow some time before receiving your cancellations/refunds.

We do plan on offering iPhone unlocking services in the near future after we send out cancellations and refunds, but the service will be different, it will be for iPhones locked to certain carriers.  Once we take care of the refunds, we will post more about this new service we are going to offer.”

CutYourSim was somehow sending the iPhone’s IMEI (fingerprint) to Apple’s whitelisted database of unlocked iPhones. When you buy an unlocked iPhone at full price from a carrier, that carrier sends the iPhone’s IMEI to an official whitelisted database that then informs Apple to unlock your device.

For more information on how a permanent unlock works, check out our explanation here.

CutYourSim has no direct relation to Apple, and it was obvious from the beginning that the company was using some roundabout (and possibly illegal) methods to add device’s to Apple’s whitelisted database. Because CutYourSim has closed its doors so suddenly, it stands to reason that they’ve felt the heat from either Apple or carriers.

Although there are probably some very good reasons that CutYourSim is discontinuing its unlocking service, it’s still sad for those of us that wanted a cheaper unlock solution. Buying an unlocked smartphone for retail price can be incredibly expensive, and the early adopters of CutYourSim reported a successful experience.

The post from CutYourSim hints that there may be some hope for the service to return, but it doesn’t look good. CutYourSim most likely had an inside source at a major carrier that was sending their customer’s IEMIs to Apple’s database.

Were you able to get your iPhone unlocked with CutYourSim before it shut down? Why do you think the company discontinued the service?