Traditionally, we begin with an explanation. Ledger Recover is a service for Ledger hardware wallets that allows a user to recover a cid phrase using their passport details. The new feature is chargeable on a monthly basis and optional, but its release sparked a wave of criticism in the community. Even Ledger co-founder Eric Larseweck’s post on Reddit didn’t help quell the outcry.

The latter reminded that Ledger’s Recover feature is entirely optional, meaning that subscribing to the service requires a certain action to be taken with the user’s hardware wallet. Accordingly, if this is not done, the security level of the existing user’s device will not change in any way.

If the client decides to use Ledger Recovery, his Sid phrase will be divided into three encrypted parts or so-called shards. The latter will be stored in encrypted form by three organisations – the wallet manufacturer itself, Coincover and another independent provider. At the same time, the service operators will receive the client’s passport data, through which the client will be able to restore the sideline in case it is lost.

In other words, the logic of the service is simple enough. However, some representatives of the cryptocurrency community began to fantasize about how the innovation could lead to the loss of digital assets by ordinary users. For example, there was a popular theory that cybercriminals could restore access to a person’s coins by obtaining their documents.

However, this is not the case. Identity verification for the sake of restoring a sido requires the presence of the user, who is to take a video of the picture. In addition to this, the latter would need to log in to the account, which is linked to the email. Theft of documents will therefore not be sufficient here.

Much more logical are the concerns about the possible interest of governments. That is, the authorities could approach the holders of the aforementioned shards, sue them and gain access to them, thus getting their hands on a person’s digital assets. Just this possibility was commented on by Ledger head Pascal Gauthier.

Could Ledger users lose cryptocurrencies

Ledger themselves are positioning Recover as a service for first-time cryptocurrency users. We’re talking about people who are unsure about keeping a piece of paper with a sido to access their blockchain addresses in case they lose their hardware wallet. Accordingly, in this case, they will have some sort of insurance in the form of three companies that will send parts of the combination if necessary and can restore access to the coins.


Experienced hardware wallet users were confused by the fact that the Ledger devices' security chip could share a syde over the internet, a possibility that had previously been denied. It turned out to be the fault of the company, which has slightly embellished reality to make the devices easier to understand. That is, hardware wallets do indeed securely store keys to addresses with digital assets and ask for confirmation of each interaction with a Sid phrase. However, if the user consents, the device can now also encrypt the three-parted sido and send those components to trusted companies.


The three-part secret combination will not only be stored on the user’s device, but also with the aforementioned companies. That said, there is nothing to stop the government from asking them for a specific person’s sid-phrase. According to Cointelegraph sources, this assumption was confirmed by Gauthier himself on the What Bitcoin Did podcast.

However, he was quick to assure that such a scenario is an exceptional measure. Only major criminals in fraud, money laundering, drug trafficking and so on will allegedly be targeted by the government.

???? YOU CAN FIND MORE INTERESTING STUFF ON OUR YANDEX.ZEN!

Although the existence of such a risk is alarming in any case, and podcast host Peter McCormack also made an emphasis on the topic. He recalled that US crypto-exchange Coinbase received a subpoena from the US IRS back in 2018, so it was forced to release the personal information of over 13,000 of its users.

Gauthier, however, questions such arguments. According to him, Ledger’s type of business is different from a stock exchange, so his company is allegedly unlikely to attract so much attention from government agencies. Ledger representatives also said that users are not forced to sign up for the new feature – that’s what “their freedom of choice” is all about.


This is indeed the case. As noted earlier, in order to use Ledger's Recover service, users of the company's hardware wallets must provide permission to do so. That is, the same principle applies here as when signing blockchain transactions using similar devices.


It was revealed today that the company is delaying the release of Ledger Recover due to criticism from the cryptocurrency community. The vendor will first publish the code for the respective service before holding a launch.


We believe that the launch of Ledger Recover has indeed been a PR failure for the world's most popular hardware wallet maker. Be that as it may, the company's management has made conclusions, so now the cryptocurrency community is waiting for the code release of this service. This, in turn, will make sure the feature is secure and will attract new users. Well, as we already found out, they will obviously be newcomers, who haven't stored digital assets outside exchanges and other centralized platforms before.


What do you think about it? Share your opinion in our cryptochat of former rich people. Discuss other important developments from the blockchain world there, while preparing for the next bullrun.