What Happened on May. 16th | Ledger's New Function Spur Controversy
In Ledger's new upgrade version 2.2.1, the hardware wallet company introduced a new function called Ledger Recover. If users enable this function, Ledger will encrypt your seed phrases using cryptography and send it to different entities that can then reconstruct seed for you. This is a ID-based key recovery service that provides a backup for secret recovery phrases.
Whilst the intention is good, this method poses several risk factors for users. Mudit Gupta, the Chief Information Security Officer of Polygon, pointed out on Twitter.
Firstly, the encrypted keys parts are sent to 3 entities and they can reconstruct the keys, but the implementation details about who these entities are seem unclear. Secondly, Ledger uses ID verification to confirm your request for key reconstruction. Identity theft is relatively easy and quite common, making this not a secure method.
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