Last week Ledger announced the launch of Ledger Recovery service to restore access to cryptocurrencies.
The function implies splitting the sid-phrase, consisting of 24 words, into three encrypted fragments, which will be stored in different places.
Ledger team says: the function is convenient for users who have lost their private keys, without which it is impossible to access assets.
Users who want to use the service are required to go through the Know Your Customer (KYC) process.
Ledger CEO Pascal Gauthier said the option is not mandatory. User funds will be safe, and the new feature will not create a loophole for cybercriminals.
However, according to Gauthier, authorities will be able to access the private keys of users using the recovery feature, for example, in the case of a subpoena.
A wallet owner could receive a subpoena when he or she needs to testify or provide documents that contain data about stored cryptoassets.
Subpoenas may also be issued to persons suspected of involvement in terrorist activities and in violation of the rules on combating the financing of terrorism.
Despite assurances from a Ledger executive, the cryptocurrency community is concerned that government agencies could gain access to digital assets without authorization.
Some cryptocurrency holders have already started looking for other hardware providers – users are convinced that the new Ledger feature undermines the principles of decentralization, which the blockchain and cryptocurrency industry is based on.
Users filed a class action lawsuit against Ledger in 2021 over a data breach that occurred in 2020. The company’s management refused to compensate customers for the damage caused.