I honestly think that while this has every right to be here - and be discussed here - given the last couple months' worth of revelations it's pretty offensive nevertheless.
Obviously SIGINT for a nation isn't a bad thing per se, but when they infringe on the core democratic principles of the state they claim to represent then that's just a disgusting abuse of power.
While I agree that this is a tender topic at the moment, I have a hard time stretching it out as far as to being offensive, since it's a cryptography challenge posted by a mathematician.
I do agree that there have been gross abuses of power committed over the past years, but this isn't necessarily something that should be the center of a debate on it. Especially since they aren't forcing you to apply to a job by participating in this challenge.
For instance, OP might have found it surprising that GCHQ would post such a challenge amidst all the controversy.