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Ledger CEO confirms government could access “sharded” wallet keys if subpoenaed

This will only be possible if the user has opted in to Ledger Recover.

Pascal Gauthier, the CEO of hardware wallet Ledger, confirmed yesterday that the private seed phrases of certain users could be handed over to governments in the event of a subpoena. This will only be the case if a user has opted in to Ledger Recover – a new optional feature that offers a retrieval solution if a seed phrase is lost. 

“It’s not a real concern”, Gauthier said, adding that a subpoena would be a rare occurrence relating to a serious act such as terrorism funding or drug trafficking. “The average person doesn’t get subpoenaed every day.”

Ledger Recover is an optional feature that splits a user’s seed phrase into three encrypted fragments known as ‘shards’. These fragments are then sent to different external entities for safekeeping. If a user needs to recover their seed phrase, the fragments can be combined and decrypted to recreate it. 

Many on Crypto Twitter expressed discontent at the feature, with Binance CEO Changpeng Zhao tweeting: “So the seed can leave the device now? Sounds like a different direction than “your keys never leave the device”.”

In yesterday’s podcast (What Bitcoin Did), Gauthier emphasised the optional nature of the feature, stating: “If you’re uncomfortable with this, you can keep your 24 words and keep doing what you’re doing today. This doesn’t change anything. It doesn’t create a back door.” 

He added: “We’re good actors. We don’t create back doors. If we did, the business would go south very quickly.”

Unlike MetaMask, Ledger is a cold wallet, meaning it stores data offline via a hardware device. It’s one of the most secure ways to store large sums of crypto. 

Ledger hardware employs a variety of security features to protect users’ private keys and funds, including secure chip technology, tamper-proof designs, PIN code protection, and secure element storage. 

While some have expressed concern that the new Recovery feature compromises the self-sovereignty of a web3 product – namely because shards are sent to third parties – it’s an optional feature that has no impact on the existing hardware.

As of 2021, lost passwords contributed to the loss of billions of dollars worth of bitcoin. “Protecting 12-24 special words is not a familiar way of protecting everyday assets,” reads a blog post on the Ledger website.

It added: “Ledger Recover can also help those without a safe place to store their secret recovery phrase. Do you have housemates who you can’t trust around your valuables? Or do you live in a place prone to natural disasters? In these situations, looking after your recovery phrase may be more of a burden than not. Ledger Recover allows you to set fire to your secret recovery phrase and rest assured you can access your account without it.” 

The blog acknowledges that if you’re a security professional or full-time crypto trader, or if you value self-sovereignty above all, Ledger Recover is “probably not for you”.

Disclaimer: CryptoPlug does not recommend that any cryptocurrency should be bought, sold, or held by you. Do conduct your own due diligence and consult your financial advisor before making any investment decisions.

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