Ledger, the Paris-based crypto hardware wallet provider, faced backlash after announcing its plans to introduce Ledger Recover, a paid subscription service that offers a seed phrase recovery system involving third-party custodians. The service was aimed at helping crypto and NFT holders recover their assets in case of a lost or forgotten seed phrase. However, this announcement contradicted Ledger’s longstanding policy of keeping users’ private keys within their devices.
In response to the criticism, Ledger decided to postpone the launch of the key recovery feature. CEO Pascal Gauthier issued an apology to users, acknowledging the communication mistake and emphasizing Ledger’s commitment to working with the community to ensure a proper implementation. He also stated that Ledger will publish all of its code before introducing the new feature. To address concerns directly, Ledger hosted a community Ask Me Anything (AMA) session on Twitter.
The Ledger controversy stems from the company’s reputation as a leading provider of hardware wallets, known for their secure storage of cryptocurrencies. The wallets require users to create a seed phrase, which, if lost, can result in the loss of funds. Ledger’s previous selling point was the guarantee that private keys never left the device, making them highly secure. The introduction of Ledger Recover, which involved encrypting and sharing the seed phrase with third-party custodians, raised concerns among the Web3 community.
The controversy surrounding Ledger Recover led to a Twitter space where the company’s co-founder and CEO addressed questions and criticisms. They clarified that each shard of the seed phrase is stored with a different custodian, and users would need to go through an identification process to recover their key. The team also announced plans to open-source the code for the service in the future, allowing users to assess its security and even create their own version.
Critics expressed worries about potential security risks and the potential for backdoors to be exploited. However, proponents of Ledger argued that hardware wallets need the ability to be upgraded to ensure functionality and adaptability to blockchain upgrades.
By making the code for Ledger Recover open-source, Ledger aims to provide transparency and empower users to verify the security of the custody mechanism. However, the incident highlights the challenges faced by blockchain organizations in effectively communicating new features in a fast-paced environment. Balancing user experience with the principles of the crypto community remains an ongoing struggle for such companies.