Ledger Faces Stiff Criticism Over New Seed Phrase Recovery Service

• Ledger has released a new seed phrase recovery service, called Ledger Recover, that divides a user’s seed phrase into three encrypted fragments trusted with three custodians.
• The service has come under heavy criticism from the crypto community who are worried about having to trust their seed phrase with external custodians and providing national identity cards or passports.
• Ledger has pushed back against the criticism, saying that the service is optional and that all fragments are stored safely on hardware security modules (HSMs).

Ledger’s New Seed Phrase Recovery Service

Ledger has released a new seed phrase recovery service called “Ledger Recover” which offers users added safeguards in case they misplace their seed phrase. The service divides a user’s seed phrase into three encrypted fragments that are trusted with three custodians – Ledger, Coinover, and a third entity. Each fragment is stored by the parties on hardware security modules (HSMs) which are essentially super-powered Ledgers. Users can reconstruct the original see phrase once the separate fragments are combined and decrypted. The company also stated that the service is optional and that Ledger users don’t have to use it if they don’t want to.

Criticism Over Seed Phrase Recovery Idea

Ledger’s new seed phrase recovery idea has come under stinging criticism from its community over its latest seed phrase recovery idea, with members taking to social media to voice their disapproval. To use the service, users have to provide a national identity card or passport to use it and would have to trust their seed phrases with external custodians; something some users feel could be very risky given past data breaches suffered by Ledger in 2020.

Ledger Pushes Back Against Criticism

Ledger has pushed back against this criticism stating that there are several inaccuracies being spread about how safe it is for users to trust their keys with external custodians. A spokesperson for Ledger elaborated explaining each fragment is completely safe as it is useless on its own and can only be decrypted on a Ledger device. They were very clear in noting that users do not have to use this service if they don’t want too; they can continue managing their own recovery phrases themselves if desired.

Prominent Crypto Community Members Speak Out

Prominent crypto community members such as investor Chris Dunn and others have taken to social media criticizing Ledger for what some believe could be disastrous for wallet owners should anything go wrong with trusting external custodians or any other problems arise due to providing personal information such as one’s passport or national identity card when using the service.


Overall, while many people understand why having an additional layer of protection may be beneficial for ensuring one does not lose access to their cryptocurrency funds should they misplace their private keys, there remains apprehension over how secure it really is entrusting ones‘ personal information with an organisation like ledger who has previously had serious data breaches of customer phone numbers and physical addresses revealed publicly in 2020