Crypto community reacts to Ledger Wallet’s secret recovery phrase service

Several crypto community members, including Ledger wallet owners, have taken to social media to express their displeasure following the release of Ledger’s latest feature. The newly introduced recovery solution for its hardware crypto wallet, known as Ledger Recover, aims to provide security in case users mistype their seed phrase.

The exciting update is Ledger has a new product, Ledger Recover, launching soon:

Here’s What Laser Recovery Is and What It Isn’t, Explained by @P3b7_ & in the thread below. pic.twitter.com/RW1w07H6pK

— Ledger (@Ledger) May 16, 2023

Ledger Recovery is a subscription service that allows users to access an additional layer of security for their private keys. The service uses a technique where the user’s seed phrase is split into three encrypted pieces, each sent to separate external entities. Once these fragments are combined and decrypted, they can be used to reconstruct the original seed phrase.

The wallet provider shared that Ledger Recovery is an optional subscription for users who want to back up their secret recovery phrase. “You don’t need to use it, and you can continue to self-manage your recovery phrase if you’ve purchased Ledger,” the company explained.

Nevertheless, the concept has angered many in the crypto community, including security experts.

“It’s a terrible idea, don’t enable this feature,” shared Mudit Gupta, chief information security officer at Polygon Labs. Gupta further elaborated in his Twitter thread that “the problem here is that the encrypted key parts are sent to 3 corporations and they can reconstruct your keys.”

The problem here is not dividing the key into 3 parts. It’s really cool! I personally may or may not do the same 🙂

The problem here is that parts of the encrypted keys are sent to 3 corporations and they can reconstruct your keys.

– Mudit Gupta (@Mudit__Gupta) May 16, 2023

Changpeng Zhao, founder and CEO of Binance, laughed at Gupta’s thread, saying, “So Seed can now leave the device? Sounds like a different direction than “your keys never leave the device”.

So can the seed now leave the machine?

Sounds like a different direction than “your keys never leave the device”.

— CZ Binance (@cz_binance) May 16, 2023

Bitcoin (BTC) investor and podcaster Chris Dunn shared, “First they exposed their customers’ mailing addresses, phone numbers and email addresses… and now they’ve put a backdoor in seed phrases. It’s time to say goodbye to Ledger,” in reference to the 2020 Ledger data leak that exposed users’ information.

First they exposed the postal addresses, phone numbers and email addresses of their customers…

And now they’ve put a backdoor in the seed phrases.

it’s time to say goodbye @Ledger https://t.co/FsZw1jUt6h

— Chris Dunn (@ChrisDunnTV) May 16, 2023

Crypto investor DCinvestor also referenced Ledger’s previous data leak that left users exposed and vulnerable, saying, “As a reminder, several years ago, Ledger exposed the names and homes of all of its customers through a data breach.” The address was leaked. They have your private key on their server.”

Recall that several years ago, Ledger leaked the names and home addresses of all its customers through a data breach

The last thing you want on their servers is your private key https://t.co/z89xxLS6ie

— DCinvestor (@iamDCinvestor) May 16, 2023

Bitcoin investor and entrepreneur Alistair Milne shared, “Of course, you can *use* Ledger’s new ‘recovery’ service and send them (…) your private keys controlling your assets, as well as your Can give a copy of ID and other personal information. ….but then why bother with hardware wallets?” His post suggested that Ledger’s latest recovery service undermines the entire point of self-custody via hard wallets.

Sure, you can *use* Ledger’s new ‘recovery’ service and give them a copy of your ID and other personal information, along with your private keys controlling your assets…

…but then why bother with hardware wallets in the first place? pic.twitter.com/ZI39B01gFV

— Alistair Milne (@alistairmilne) May 16, 2023

RELATED: Ledger Data Leak: A ‘Simple Mistake’ Exposed 270K Crypto Wallet Buyers

In April, Ledger launched the Ledger Nano S Plus, a specialized wallet tailored for non-fungible tokens (NFTs). The Ledger Nano S Plus aims to enhance user security and provide a better experience for Web3 customers who regularly trade NFTs. This development follows the recent integration of Ledger’s “Clear Signing” technology through Ledger Live, which further strengthens user security measures.

Established in 2014, Ledger has become a major global player in the hardware cryptocurrency wallet space. The company has reportedly sold an estimated 4.5 million wallets and offers six different wallet models.

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