Ledger chief concedes possible government access to wallet assets

Government authorities could, via a court order, demand access to the funds in the Ledger wallet connected to the Recover key-recovery service. This was confirmed by the manufacturer’s CEO, Pascal Gauthier.

However, speaking on the podcast What Bitcoin Did, he described such a scenario as unlikely.

In mid-May, the company added a feature in the firmware of the Nano X hardware wallet that allows creating a backup of the seed phrase. It is split into three encrypted fragments. Ledger Recover subscribers can restore it on their device.

The feature drew mixed reactions from the community. Users noted the risk of third-party access to the wallet. Some concluded that the manufacturer had initially planned a backdoor in the software to obtain keys.

Ledger’s CTO Charles Guillemet commented on the new option. According to him, the product became a deliberate “compromise” designed for inexperienced users and to attract customers.

On the day of the podcast’s release, the support team said that the software “always allowed key extraction.” The tweet was subsequently deleted, but the community reacted sharply.

On Reddit, former CEO and shareholder Eric Larchevèque weighed in on Ledger’s security policy.

“Ledger remains secure, there is no backdoor, Recover is not a conspiracy, no one will ever be forced to use the option. The recovery code in the firmware is not malicious and does not enable arbitrary extraction of seed phrases,” he said.

At the same time, Larchevèque conceded that the government could subpoena the custodians of its encrypted fragments in court and gain access to the wallet.

Commenting on such a development, Gauthier described this as the “only issue” with the key-recovery function. In his view, such actions by authorities would only be possible in serious circumstances such as terrorism or drug offences.

“It’s not true that ordinary people are summoned to court every day,” said the head of Ledger.

In March, the wallet maker announced the expansion of its Series C funding round amid the rise in sales following the FTX collapse. Ledger’s valuation is reportedly €1.3 billion.