Squirrel-Setup can't extract installer in Windows 10

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We have an app which uses squirrel.windows for installation and updating. When executing Setup.exe it can't extract the installer and we get the following error message:

Setup exception

It tries to install to the ..user//AppData.. directory. Setup.exe works perfectly for Windows7 and it used to work for Windows10 (we don't know exactly when it stopped working). We tried to run Setup.exe as administrator and in compatibility mode, however it did not help. But running Setup.exe as Domain-administrator works, so we expect that something changed with the user-rights in Windows 10. We also updated squirrel.windows to the latest version (1.9) and added SQUIRREL_TEMP to the environment variables, but nothing helped.

Any suggestions what could be wrong?

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There are 2 best solutions below

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I don't know why, however, upgrading Squirrel.Windows to version 1.9.0 fixed the issue.

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This is pretty late to post, But if someone stumbles here please read this,

Workaround - Please try disabling Antivirus software if any. In my case, user had Kaspersky AV, so disabled it for an hour and tried installation it worked.

Solution - The robust solution would be digitally signing setup.exe that is generated by Squirrel (using releasify). Please refer this for details