Hardware wallet maker Ledger has officially launched its controversial “Recover” seed phrase backup service this week. The paid subscription service aims to help users recover access to their crypto assets if they lose their original seed phrase.
Keypoints
- Ledger has officially rolled out its “Recover” service, which provides backup for users’ crypto wallet recovery seed phrases. This allows users to recover access to their crypto assets if they lose their original seed phrase.
- Recover involves encrypting, duplicating, and dividing users’ private keys into three pieces held by Ledger, Coincover, and an independent backup provider. This decentralization of the backup has prompted criticism from some crypto users concerned about privacy and security.
- Critics argue Ledger is undermining its commitment to privacy and security by asking users to pay to make their private keys potentially more vulnerable.
- Ledger’s CEO defends the service as an optional way to prevent users from losing access to their crypto if they forget their seed phrase. He says too many people have lost assets this way.
- The service is now live for Ledger’s Nano X wallet. It will integrate with other Ledger wallets in the future. Users have to verify their identity but Ledger claims this is less invasive than typical KYC processes.
- The recovery service costs $9.99 per month. If users stop paying, they have 9 months to reactivate before needing to pay a $50 fee.
Ledger Recover has prompted backlash from critics who argue it undermines the company’s commitment to privacy and security. The service involves encrypting, duplicating, and dividing users’ private keys into three pieces held by Ledger, crypto security firm Coincover, and an independent provider.
“Let’s be clear: too many people have lost their digital assets because they’ve lost their Secret Recovery Phrase,” wrote Ledger CEO Pascal Gauthier in an announcement on Twitter. “This risk stops people from using crypto, and certainly from using self-custody.”
Detractors say Ledger is compromising security by asking users to pay to make their private keys potentially more vulnerable. But the company maintains the service is completely optional for those who want an extra layer of protection against losing their seed phrase.
Oh, finally I can pay for KYCing myself and sending my seed to 3rd parties!
— Bizon (@TardanBizonov) October 24, 2023
Initially launched for Ledger’s Nano X wallet, Recover will integrate with other company products like the Ledger Stax and Nano S Plus in the future. Users have to verify their identity, though Ledger claims this is less invasive than typical KYC checks.
The recovery service costs $9.99 per month, or around $120 per year. If users fail to keep paying, they’ll have 9 months to reactivate before a $50 administration fee is required.
The launch comes after Ledger paused development of Recover earlier this year amid backlash. Competitor Trezor has avoided cloud-based recovery, instead offering a physical backup device for seed phrases.
While Ledger maintains Recover meets customer demand for resilience against lost keys, critics argue new potential vulnerabilities outweigh the convenience of offloading seed phrase backups to a centralized service. The debate over the appropriate tradeoffs between security and usability continues as more novice crypto users enter the market.
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