Ledger Bats Back Criticism Of New Wallet Recovery Service
Paris-based crypto wallet maker Ledger found itself at the centre of controversy this week following the launch of its new “Ledger Recover” feature.
The service, aimed at providing a secure way for users to recover wallet seed phrases, has drawn scrutiny from critics who claim it contradicts Ledger’s commitment to privacy and security.
Ledger, known for its hardware wallets that prioritise offline storage for enhanced security, faced a challenge in finding a user-friendly solution for seed phrase recovery. While hardware wallets are considered the safest option for cryptocurrencies, the loss of a seed phrase could lead to irreversible loss of funds.
The Ledger Recover service sought to address this issue by storing encrypted seed phrase versions with third-party custodians.
The response of Crypto Twitter was swift and critical, with concerns raised about the introduction of new risks through third-party involvement and the requirement for customers to provide a government-issued ID for accessing the service.
Sure, you *could* use Ledger's new 'Recover' service and give them the your private keys controlling your assets as well as a copy of your ID and other personal information...— Alistair Milne (@alistairmilne) May 16, 2023
... but why then bother with a hardware wallet in the first place? pic.twitter.com/ZI39B01gFV
Prominent Bitcoin investor Alistair Milne questioned the necessity of hardware wallet if users were willing to share their private keys and personal information with Ledger.
Others pointed out past security breaches experienced by Ledger, which raised doubts about the company’s security practices.
In response to the backlash, Ledger CEO Pascal Gauthier and the leadership team took to Twitter Spaces to address concerns and defend the new service. Gauthier emphasised that Ledger Recover was optional, ensuring users remained in control of their funds.
If you choose to subscribe, Ledger Recover encrypts a version of your private key and splits it into three fragments (using Shamir Secret Sharing) - all of this happens on the Secure Element chip, so your Secret Recovery Phrase is not at risk.— Ledger (@Ledger) May 16, 2023
He also addressed concerns about Ledger’s security track record, noting that despite having millions of devices on the market, the company had not experienced any hacks or compromises – hence, assuring that no compromises would be tolerated by Ledger when it comes to security.
While the controversy highlights the ongoing tension between user experience and core principles within the crypto community, Ledger believes that the new feature meets the evolving needs of new users entering the crypto space.
The company also believes that offering a convenient and secure solution for seed phrase recovery will be crucial in attracting the next wave of cryptocurrency adopters.