Ledger Sparks Outrage With ID-Based Seed Phrase Recovery

Hardware wallet manufacturer Ledger is facing criticism for a new firmware update. The update introduces a recovery feature that allows Ledger to back up seed phrases.

Cold wallet manufacturer Ledger is under fire yet again, this time for releasing a firmware upgrade that includes a subscription-based feature called “Recover.” The feature is facing criticism for granting the company access to customers’ seed phrases, which undermines the purpose of a hardware wallet. The feature comes as a part of the 2.2.1 firmware update.

Ledger KYC Registration a Major Point of Criticism

The feature is also facing criticism for requiring KYC registration, which goes against the privacy values held by many in the crypto community. The registration requires users to have to send a picture of a government-issued ID.

Currently, the subscription service is only available to Ledger Nano X devices, with the identity card requirement pertaining to users from the EU, the U.K., Canada, and the U.S.

The crypto community is harshly criticizing the feature because it renders the purpose of a hardware wallet invalid—namely, keeping the seed phrases to yourself. They have been especially critical because of the fact that Ledger has experienced multiple breaches in the past, which has led to a lack of trust.

Multiple Data Breaches

Perhaps the most significant criticism that the wallet manufacturer has received has had to do with data breaches. In December 2020, the physical addresses of 270,000 Ledger owners were stolen, with this following another security breach in July 2020. The hacker shared the information for free on a forum.

Unsurprisingly, hackers used that information to target victims in an extortion campaign. Ledger responded to the incident with its CEO saying that the company “deeply regret this situation.” He assuaged users by emphasizing that there was no correlation between the data and the funds in their wallets. The crypto community, however, was still quite riled.

Wallet Maker Also Ridiculed for ‘Stylish’ Chain

Ledger has received criticism on other occasions in the past. Most recently, for releasing a “stylish” necklace for its cold wallet. The chain came with a Nano X OnChain bundle. The crypto community roasted Ledger for releasing a product that could so obviously attract theft.

Users derided that the company was suggesting that users take their cold wallets outside and wear them around their necks. Ledger defended the product, stating that it “does NOT give access to ALL your wealth.”