Ledger CEO Pascal Gauthier says that the company’s new Recover service, which allows users to backup their seed phrases with third parties, is unlikely to expose them to government subpoenas.
About Ledger Recover
Ledger, a leading provider of hardware wallets for cryptocurrencies, has recently launched a new service called Ledger Recover, which enables users to create an encrypted backup of their seed phrases that only they can access.
Users typically write down their seed phrases on paper and store them in a safe place. These 24-word phrases restore a crypto wallet’s private keys if the device is lost or damaged.
However, this approach has some drawbacks, such as the risk of losing or damaging the paper and forgetting or misspelling the words.
Ledger Recover aims to solve these problems by letting users opt-in to have their seed phrases encrypted and split into three shards.
These fragments are then stored with three third-party companies: Ledger, Coincover, and a third provider. Restoring the seed phrase requires combining the three shards on a Ledger device, necessitating the user to pass an identity verification test.
The service costs $9.99 per month, and if a user stops paying, they will lose access to their backup after a certain period.
User concerns
Ledger users have sparked controversy over the optional service, which entrusts their seed phrases to third parties and raises security and privacy concerns.
Some users have also questioned whether governments could compel Ledger to hand over the shards if they receive a subpoena.
Ledger shareholder and former CEO Éric Larchevêque acknowledged this possibility in a January 15 tweet, stating that “there is no backdoor” but “there is indeed a subpoena risk.” He added that this risk is “very low” and that users can opt out of the service anytime.
However, Ledger CEO Pascal Gauthier has dismissed these concerns, arguing that such a scenario is unlikely. Speaking on the What Bitcoin Did podcast on January 18, he said:
“The only concern really is if we get subpoenaed by a government to say now this user specifically, we would like you to retrieve the three shards etc.”
He added that this isn’t a concern because governments only issue subpoenas like this in the case of a serious act like terrorism or one involving drugs.
“It’s not true that the average person gets subpoenaed every day,” he said.
Gauthier also defended the service as a way for users to have more convenience and peace of mind when managing their crypto wallets.
He stated that Ledger Recover is an optional feature that does not compromise the self-custody or security of users’ funds.
In addition, he explained that Ledger Recover relies on companies with industry-leading encryption and ID verification technology and that the service does not store users’ data.
