In a recent interview, Ledger CEO Pascal Gauthier confirmed that the government could access clients’ private keys through the Ledger Recover feature in case of a subpoena.
Even though he clarified that “subpoenas are not for everyone,” his comments confirmed what the crypto community believed about Ledger devices.
Typically, subpoenas are issued in extreme cases. For example, they can target individuals suspected of engaging in terrorist activities and breaking existing anti-terrorist financing rules.
Ledger is a hardware wallet manufacturer, and through their devices, users can store the private keys of several cryptocurrencies, including Bitcoin, Ethereum, and other tokens.
In crypto, private keys are important seed phrases for signing outgoing transactions. Without a private key, a user cannot confirm coin ownership.
Moreover, as a hardware cold wallet, Ledger devices are technically offline and not connected to the internet. They are different from hot wallets like MetaMask and exchange wallets connected to the internet. As a result, cold wallet devices are considered more secure and are recommended for storing big stash of coins.
Though the hardware wallet manufacturer has continued to be one of the biggest cold wallet providers, the recent release of the ‘Recover’ feature has been controversial, stirring debate.
It works by splitting the 24-word recovery phrase into three shards, encrypting them, and storing them in three separate locations, including with an approved crypto custodian.
Those who opt-in must also submit their personal information as part of the know-your-customer (KYC) procedure. Ledger argues that this feature is convenient for users who misplace their private keys and need fast coin recovery.
Still, it should be noted that this service is optional and allows users to recover assets should they misplace their seed phrases.
Community Is Concerned
The cryptocurrency community is currently torn about whether the feature can provide a backdoor for government agencies to access private coins without their authority.
In the interview, Gauthier reiterated that funds are safe and that they hadn’t created a backdoor in their wallets. However, he asserts that the government can access the private keys of users who utilize the Ledger Recover feature only if a subpoena is issued.
A court may issue a subpoena, ordering the wallet holder to testify in a legal proceeding or produce documents, details of which might include cryptocurrencies held and their amounts.
Some crypto holders have stated that they are considering other hardware providers, doubting Ledger’s new feature, which they claim undermines the principles of self-custody and decentralization that crypto and blockchain espouse.