On May 16, the hardware wallet provider Ledger announced its upcoming product called Ledger Recover. However, this announcement received significant backlash and negative feedback from the crypto community on Twitter. Here’s an overview of the situation:
What Is Ledger Recover?
Ledger is a hardware crypto wallet provider that offers cold storage for users’ crypto assets. Hardware wallets are termed the best crypto wallet in terms of security since the seed phrases that unlock the wallet are stored offline and are accessible only by the user.
The disadvantage is that the user loses complete access to the wallet and funds if the seed phrases get misplaced.
Ledger sought to solve the problem by unveiling Ledger Recover. The yet-to-be-released service enhances the security of seed phrases. The product will generate three encrypted fragments of each user’s seed phrases and distribute them to three companies. They are Ledger, Coincover, and an independent backup service provider.
Each fragment is meaningless individually and provides no access to the wallet. However, obtaining two out of the three fragments can unlock the wallet. Ledger noted that the service comes with a monthly subscription fee of $9.99 and is exclusive to users of its Nano X wallet. This feature is optional.
Crypto Community Criticizes the Product
Instead of embracing the new product as an added protection to seed phrases, the crypto community frowns at it. Many argue that introducing custodians for fragments of the seed phrases defeats the entire purpose of a hardware wallet. Others raised the suspicion that Ledger has a backdoor on its products.
For example, Bitcoin investor and podcaster Chris Dunn noted that he had stuck with Ledger despite a previous security compromising situation. However, the introduction of Ledger Recover is a sign for him to say goodbye to using the company’s services.
Mudit Gupta, the chief information security officer at Polygon Labs, emphatically stated that users should not enable the feature, as “the encrypted keys parts are sent to 3 corporations, and they can reconstruct your keys.”
Discarding these claims via a Twitter space, Ledger’s CEO Nicolas Bacca stated:
“This is not a backdoor at all, because nothing will happen without your consent on your device.”
