Ledger, a popular hardware wallet manufacturer, recently launched a new feature called Ledger Recover. This feature allows users to “share” their wallet seeds with three different parties for added security in case of loss or damage to the device. However, concerns were raised within the crypto community that this could potentially lead to government access to user wallet seeds.
Pascal Gauthier, the CEO of Ledger, addressed these concerns in an interview on the What Bitcoin Did podcast on May 22. Gauthier explained that the only way government access to user wallet seeds would be possible is if Ledger was subpoenaed. He stated that governments only issue subpoenas in rare cases related to terrorism, drug trafficking, and other criminal offenses, and that average individuals are not subpoenaed on a daily basis.
Gauthier also argued that collusion between shard holders (the three parties with access to the user’s wallet seed) is not possible in 99% of all cases. He maintained that the only concern would be if Ledger was subpoenaed by a government to retrieve the three shards.
While Gauthier’s assurances were comforting to some, others on the podcast suggested that governments could issue a subpoena for tax reasons. The Internal Revenue Service (IRS) has previously subpoenaed Coinbase, Kraken, and Circle for user information. Gauthier argued that Ledger does not provide banking services like Coinbase and does not have any information that would be of interest to the IRS.
Furthermore, Ledger does make use of extended public keys (x-pubs) which display user activity. While this could be of interest to tax agencies, it is a separate feature from Ledger Recover.
Gauthier reiterated that Ledger Recover is an optional feature and that users who are not comfortable with it can use Ledger’s other storage methods. He also noted that the feature is designed to be secure and that users can trust Ledger with their wallet seeds.
While concerns have been raised about government access to user wallet seeds through Ledger Recover, Gauthier assures users that this is only possible through a subpoena and is only likely in rare cases related to criminal activity. Users who are still uncomfortable with the feature can opt for other storage methods.