Hardware wallet provider Ledger has decided to delay the release of its key recovery feature, called Ledger Recover, following strong backlash from the cryptocurrency community. The company faced criticism for its plan to allow users to store encrypted backups of their seed phrases with three custodians, which would enable them to restore their private keys if they lost or forgot their seed phrases. The proposed feature required a know-your-customer (KYC) verification.
Ledger CEO Pascal Gauthier addressed the concerns in a letter to users, stating that the company would not introduce the new feature without first releasing the code for public scrutiny. In response to the controversy, Ledger also scheduled a Twitter Spaces session to further discuss the issue.
Critics raised several points of contention, expressing unease about sharing seed phrases with custodians and the potential risks associated with data breaches, hacks, and government intervention. Additionally, the lack of open-source code for the Recover feature was a cause for concern, as it prevented independent auditing of the custody mechanism’s security.
In light of the backlash, Gauthier acknowledged the need to address the community’s concerns and announced an accelerated plan to open-source Ledger’s code. He emphasized the importance of key recovery services in facilitating the adoption of cryptocurrencies by users who may find self-custody challenging or risky.
Ledger’s decision to delay the key recovery feature reflects a growing recognition within the company of the need for transparency and community engagement in developing and implementing new features for its hardware wallets.