Converter has the option of storing the conversion VM locally, but that requires the full converter installed locally. It uses VSS to capture the PC and create the VM image. There is an option to remotely capture a PC, which just deploys an agent from the Converter server. Presumably the same VSS method is employed to create a VM image which is send to the server SMB share.
What I am trying to work out is if the agent-to-server file writing (writing the VMDK) is encrypted in any way - and if it is using VSS or something else over the network.
It would probably require alot of effort to snoop on data and do anything with it, but if someone asked if it was possible I would like to be able to answer.