[BUG] Compaction is broken in the CC SDK

Preflight Checklist

• [x] I have searched existing issues and this hasn't been reported yet
• [x] This is a single bug report (please file separate reports for different bugs)
• [x] I am using the latest version of Claude Code

What's Wrong?

/compact and auto-compaction no longer work on CC SDK v2.0.17. They fail with the following error:

[ERROR] Error: Error: 400 {"type":"error","error":{"type":"invalid_request_error","message":"This credential is only authorized for use with Claude Code and cannot be used for other API requests."},"request_id":"req_011CU9VQuTnSY4cWnorF9wrD"} 

What Should Happen?

/compact should compact the conversation and allow me to continue on a new session with a fresh context window that includes the compaction summary of the my conversation so far.

You can see in our logs below that our UserPromptSubmit hook runs _after_ the API request fails, which is weird. It's like just the text /compact alone causes the failure.

Error Messages/Logs

[2025-10-15T18:53:41.979Z] [CC-SDK-STDERR]: [ERROR] Error: Error: 400 {"type":"error","error":{"type":"invalid_request_error","message":"This credential is only authorized for use with Claude Code and cannot be used for other API requests."},"request_id":"req_011CU9VQuTnSY4cWnorF9wrD"}
    at generate (/$bunfs/root/claude:199:83027)
    at makeRequest (/$bunfs/root/claude:353:5345)
    at processTicksAndRejections (native:7:39)
[2025-10-15T18:53:43.313Z] [2f2a5756-7075-469a-8a83-476048f131f2/1760554420945] Committing with lastAssistantMessageId: start
[2025-10-15T18:53:43.570Z] [2f2a5756-7075-469a-8a83-476048f131f2/1760554420945] Created checkpoint with commit message: conductor-checkpoint-start
[2025-10-15T18:53:45.655Z] [CC-SDK-STDERR]: [ERROR] "Error: Error: 400 {\"type\":\"error\",\"error\":{\"type\":\"invalid_request_error\",\"message\":\"This credential is only authorized for use with Claude Code and cannot be used for other API requests.\"},\"request_id\":\"req_011CU9VRBZf64SwCKMNQYxbb\"}\n    at generate (/$bunfs/root/claude:199:83027)\n    at makeRequest (/$bunfs/root/claude:353:5345)\n    at processTicksAndRejections (native:7:39)"
[2025-10-15T18:53:45.936Z] [CC-SDK-STDERR]: [ERROR] "Error: Error: 400 {\"type\":\"error\",\"error\":{\"type\":\"invalid_request_error\",\"message\":\"This credential is only authorized for use with Claude Code and cannot be used for other API requests.\"},\"request_id\":\"req_011CU9VRCF5sZTzH7YMidgmf\"}\n    at generate (/$bunfs/root/claude:199:83027)\n    at makeRequest (/$bunfs/root/claude:353:5345)\n    at processTicksAndRejections (native:7:39)"
[2025-10-15T18:53:57.297Z] [CC-SDK-STDERR]: [ERROR] "Error: Error: 400 {\"type\":\"error\",\"error\":{\"type\":\"invalid_request_error\",\"message\":\"This credential is only authorized for use with Claude Code and cannot be used for other API requests.\"},\"request_id\":\"req_011CU9VS3EP7iGjYc96oFMwz\"}\n    at generate (/$bunfs/root/claude:199:83027)\n    at makeRequest (/$bunfs/root/claude:353:5345)\n    at processTicksAndRejections (native:7:39)"

Steps to Reproduce

1. Using the Claude Code SDK v2.0.17, send a message like "2 + 2"
2. Send another message like /compact. You should now see the error log in stderr.
3. Send another message asking "what we've discussed so far", and Claude Code will have no memory of the first question asked.

Claude Model

None

Is this a regression?

Yes, this worked in a previous version

Last Working Version

2.0.0

Claude Code Version

2.0.17

Platform

Anthropic API

Operating System

macOS

Terminal/Shell

Non-interactive/CI environment

Additional Information

FWIW, we only tested this on 2.0.0 (working fine) and 2.0.17 (failing). We're not certain exactly when this bug was introduced.