Crypto hardware wallet manufacturer Ledger SAS has faced criticism over its new opt-in feature called Ledger Recover that encrypts seed phrase and distributes its shards among Ledger's trusted custodians.
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According to Ledger's series of tweets, the feature splits the encrypted seed phrase (using Shamir Secret Sharing) into among three different parties on "cryptographically-secure Hardware Security Modules." Customers can restore access only after they provide ID verification.
The company didn't name the custodians, and it's unclear how exactly the process of verification would work. Ledger reassured customers the feature is not automatically enabled by any firmware updates.
Polygon CIO, Mudit Gupta, called the feature a "horrendous idea," saying bad actors can easily fake identification. He also stressed that custodians can reconstruct encrypted keys.
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