On September 20, in an interview with The Block, Ledger’s CEO Pascal Gauthier stated that the controversial private-key recovery service called "Ledger Recover" will be launched by the end of this year. Let's dive into what Ledger Recover is and why it has sparked mixed reactions within the community.
Ledger is a French company producing cold hardware wallets. Read more about it and other ways to store cryptocurrency.
Understanding Ledger Recover and its controversy
Ledger Recover is a new subscribable feature for Ledger wallets, first introduced on May 16 of this year. This feature enables users to restore their seed phrase through a pre-made backup, which is stored on a third-party server.
The announcement of Ledger Recover triggered a flurry of criticism within the crypto community, which can be summarised in the following points:
🕸️ Ledger is no longer a cold wallet. Now, it is transitioning to becoming a hot wallet because the seed phrase will be stored online, not just on the physical device.
☝️ There are some security risks and a potential attack vector for hackers. Even though it is an optional feature, the mere fact of having this software is already a risk.
🪪 Now users need to proceed a Know Your Customer (KYC) procedure. This will allow the company and law enforcement to link a specific user to a particular device.
👮 Ledger Recover opens up government backdoors. There is some fear that it could give authorities access to users' funds on request to Ledger.
Incidentally, the latter point was confirmed by Ledger co-founder and ex-CEO Éric Larchevêque on Reddit. He wrote, "Using Recover gives you an easy recovery option and mitigates backup loss, but your assets could get frozen by the government (in theory, I'm not a lawyer and I didn't see any legal opinion on the subject)".
Ledger’s response to concerns
Back in May, Ledger quickly responded to the negative reaction of the crypto community and postponed the addition of the Ledger Recover feature. However, by June 21, Ledger's CTO, Charles Guillemet, had posted a white paper for Ledger Recover on GitHub, indicating that the update would be released in Q4 of this year.
During a recent interview with The Block, Pascal Gauthier affirmed Ledger's intentions. He emphasised that the company has made concessions by open-sourcing the service’s code. In his opinion, it is a safe way to store seed phrase. "I'll use it personally. So, if anyone has a doubt, I will be the first user of that product because I think it's a better way to store my 24 words", Gauthier explained.
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