Earlier quoted context omitted.
The intermediate, untrusted computer (in this case koding.com's VM) can read my password.
This isn't really the intended use case, sshing from your Koding VM to other servers. However the VM we give you is yours - you have root and full control over it, if there is something on there to capture your passwords then you put it there :) (We are not the NSA)
Yet in your own site you say: "Stuck on a Windows machine and can’t stand using PuTTY to SSH into work? "
I have to agree with OP, using this for any SSH work would be asking for trouble even if one were to use SSH keys with passwords.