Ledger Faces Backlash for Controversial Backup Tool as Crypto Community Expresses Discontent

Hardware wallet maker Ledger is facing significant backlash for its recent introduction of a tool enabling users to back up their seed phrases through the transmission of encrypted key fragments to third-party firms. The crypto community has not embraced this new feature, with numerous digital currency users venting their frustration on social media platforms.

In a recent move, hardware wallet manufacturer Ledger unveiled their latest tool, Ledger Recover. Unfortunately, the reception within the crypto community has been far from positive.

“Ledger Recover is an optional subscription for users who want a backup of their Secret Recovery Phrase,” the company stated on May 16. “You don’t have to use it, and can continue managing your recovery phrase yourself if that’s why you bought a Ledger.”

By utilizing Ledger Recover, users have the option to divide their seed into three encrypted shards, each containing a portion of the private key. These encrypted fragments are subsequently entrusted to third-party companies for secure storage. The hardware wallet company explains:

Ledger Recover encrypts a version of your private key and splits it into three fragments (using Shamir Secret Sharing) – all of this happens on the Secure Element chip, so your Secret Recovery Phrase is not at risk. These encrypted fragments are stored by 3 different parties on cryptographically-secure Hardware Security Modules.

The announcement sparked a significant wave of discontent among cryptocurrency users. “Epic Fail,” one user responded to Ledger’s announcement on Tuesday. Bitcoin proponent Alistair Milne told his 126,000 Twitter followers: “Sure, you *could* use Ledger’s new ‘Recover’ service and give them your private keys controlling your assets as well as a copy of your ID and other personal information … but why bother with a hardware wallet in the first place?”

By 4:00 p.m. Eastern Time on Tuesday, the name “Ledger” had surged in popularity, garnering 224,000 tweets in the Business and Finance category on Twitter. Notably, Mudit Gupta, an executive at Polygon Labs, vehemently criticized the recovery tool service.

“Ledger just released a new update for Nano X that allows social recovery of your seed phrase,” Gupta said. “It encrypts your seed in 3 shards and sends it to different entities that can then reconstruct the seed for you post ID verification. It’s a horrendous idea, DON’T enable this feature.”

The Twitter user Foobar told his 131,000 Twitter followers to boycott Ledger products. “Stop using Ledger hardware wallets,” Foobar tweeted. “Migrate away from them immediately. They’ve shown nothing but gross incompetence and wild misunderstanding of their own purpose. And now they’ve publicly admitted to intentionally backdooring their own proprietary hardware. Stop using Ledger.”

Ledger was also accused of deleting a tweet that it added to the announcement thread. “I have personally used Ledger hardware wallets for about 7 years. Today is the first day I’ve decided to look elsewhere,” the Youtuber Colin Talks Crypto told his Twitter followers on Tuesday.

What are your thoughts on Ledger’s controversial backup tool? Do you believe there are better alternatives available, or do you see potential in this approach? Share your insights and opinions in the comments section below.