Encryption: no, hashing: maybe
Wikipedia on encryption:
In cryptography, encryption is the process of encoding messages or information in such a way that only authorized parties can read it.
Typically how this works is, you encrypt some data using a key, pass the encrypted data to the other party, and they decrypt it with a key (which may or may not be the same key, depending on if the encryption algorithm uses symmetric or asymmetric keys). The defining feature of encryption is, without the decryption key, a third party would not be able to retrieve the original data. Some algorithms are more secure than others, but that's not a relevant discussion.
Wikipedia on hash functions:
A hash function is any function that can be used to map data of arbitrary size to data of fixed size.
The key difference between hash functions and encryption is that encryption is designed to be reversible if you have the proper key. A hash function may or may not be reversible; a certain class of functions called cryptographic hash functions are designed to be irreversible, outside of brute-force attacks.
A Seed program is definitely not an encrypted form of a Befunge-98 program. There is no key that one could use to efficiently compute a Seed program from a Befunge-98 program.
As for hashing, possibly, depending on how you look at it. If you view the Seed program as being the input, and the Befunge-98 program as being the hash, the definition sort of works. Though it makes use of an RNG (specifically the Mersenne Twister algorithm), computing a Befunge-98 program from a Seed program is wholly deterministic, and can be done in an efficient manner. On the flipside, computing a Seed program from a Befunge-98 program (or even just a Seed program from a given expected output) can only be done by brute-forcing the seed space (unless the Mersenne Twister algorithm has some major flaws in its design).
As for the challenge in question, though submitting two interwoven Seed programs is not explicitly against the rules, some might interpret it as being against the spirit of the challenge, because it involves an RNG. That's barely relevant though, because Seed programs are wholly deterministic. Though the crack would likely come about through the use of brute force, I don't see a problem with that, as the brute forcing is not unbounded; there are a finite number of pairs of valid Seed programs that could be formed from your entry. I suspect the downvotes were from ignorance; people saw "RNG" in the language description and hastily downvoted without reading further and seeing that Seed is actually deterministic.