Hardware wallet maker Ledger is facing significant backlash for its recent introduction of a tool enabling users to back up their seed phrases through the transmission of encrypted key fragments to third-party firms. The crypto community has not embraced this new feature, with numerous digital currency users venting their frustration on social media platforms.

Ledger’s Backup Tool Sparks Outrage in Crypto Circles

In a recent move, hardware wallet manufacturer Ledger unveiled their latest tool, Ledger Recover. Unfortunately, the reception within the crypto community has been far from positive.

“Ledger Recover is an optional subscription for users who want a backup of their Secret Recovery Phrase,” the company stated on May 16. “You don’t have to use it, and can continue managing your recovery phrase yourself if that’s why you bought a Ledger.”

By utilizing Ledger Recover, users have the option to divide their seed into three encrypted shards, each containing a portion of the private key. These encrypted fragments are subsequently entrusted to third-party companies for secure storage. The hardware wallet company explains:

Ledger Recover encrypts a version of your private key and splits it into three fragments (using Shamir Secret Sharing) – all of this happens on the Secure Element chip, so your Secret Recovery Phrase is not at risk. These encrypted fragments are stored by 3 different parties on cryptographically-secure Hardware Security Modules.

The announcement sparked a significant wave of discontent among cryptocurrency users. “Epic Fail,” one user responded to Ledger’s announcement on Tuesday. Bitcoin proponent Alistair Milne told his 126,000 Twitter followers: “Sure, you *could* use Ledger’s new ‘Recover’ service and give them your private keys controlling your assets as well as a copy of your ID and other personal information … but why bother with a hardware wallet in the first place?”

By 4:00 p.m. Eastern Time on Tuesday, the name “Ledger” had surged in popularity, garnering 224,000 tweets in the Business and Finance category on Twitter. Notably, Mudit Gupta, an executive at Polygon Labs, vehemently criticized the recovery tool service.

“Ledger just released a new update for Nano X that allows social recovery of your seed phrase,” Gupta said. “It encrypts your seed in 3 shards and sends it to different entities that can then reconstruct the seed for you post ID verification. It’s a horrendous idea, DON’T enable this feature.”

The Twitter user Foobar told his 131,000 Twitter followers to boycott Ledger products. “Stop using Ledger hardware wallets,” Foobar tweeted. “Migrate away from them immediately. They’ve shown nothing but gross incompetence and wild misunderstanding of their own purpose. And now they’ve publicly admitted to intentionally backdooring their own proprietary hardware. Stop using Ledger.”

Ledger was also accused of deleting a tweet that it added to the announcement thread. “I have personally used Ledger hardware wallets for about 7 years. Today is the first day I’ve decided to look elsewhere,” the Youtuber Colin Talks Crypto told his Twitter followers on Tuesday.

What are your thoughts on Ledger’s controversial backup tool? Do you believe there are better alternatives available, or do you see potential in this approach? Share your insights and opinions in the comments section below.

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Cryptocurrency and technology proponents have recently been discussing a new bipartisan bill called the “Restricting the Emergence of Security Threats that Risk Information and Communications Technology (RESTRICT)” Act. In addition to targeting firms such as Kaspersky, Huawei, and Tiktok, opponents of the bill believe one of its provisions will punish ordinary Americans for leveraging a virtual private network (VPN). However, a spokesperson for Democratic senator Mark Warner insists the “legislation is aimed squarely at companies” and “not at individual users.”

Concerns Over the RESTRICT Act’s Potential Impact on Cryptocurrency and VPN Use

Since the bill was introduced in March, the RESTRICT Act, sponsored by over a dozen bipartisan politicians and initiated by senator Mark Warner (D-VA), has been the center of controversy. A great deal of attention has been focused on the bill targeting Tiktok, and several reports say the legislation could be used to ban the app in the United States. The act would give the U.S. president and secretary of commerce the ability to regulate technologies that can be tied to nations such as Russia, China, Venezuela, North Korea, Cuba, and Iran. Tech advocates and cryptocurrency supporters are concerned about the bill and have been discussing its implications on forums and social media.

One particular provision in Warner’s RESTRICT Act has caused many people to believe that Americans could be jailed for using a virtual private network (VPN). The bill notes that there are strict penalties, including a 20-year sentence, for using “communications technology products and services” with applications or web portals associated with “foreign adversaries.” While some have said that the RESTRICT Act could ban Tiktok and target Americans for using a VPN with websites tied to foreign adversaries, others have gone as far as to say that the bill could be used to ban bitcoin. Venture capitalist and angel investor Balaji Srinivasan stated:

The RESTRICT Act is the American Great Firewall. Become China in the name of beating China.

Former politician and government critic Ron Paul said in a recent broadcast that the “RESTRICT Act is the Patriot Act on steroids.” Another former member of the U.S. Congress, Justin Amash, stressed on Twitter that the “RESTRICT Act isn’t about banning TikTok; it’s about controlling you. It gives broad powers to the executive branch, with few checks, and will be abused in every way you can imagine.” The nonprofit organization focused on the policy issues facing cryptocurrencies, Coin Center, also published a blog post on the subject and noted that it could be used against cryptocurrency users.

“The RESTRICT Act creates blanket authority, with few checks, to ban just about anything linked to a ‘foreign adversary,’” Coin Center explains in the editorial. “An overbroad attempt to ban crypto using these new powers would be open to a court challenge, but the law has worryingly narrow avenues for review.” Coin Center concludes that “while the primary purpose of the act is to address national security concerns, its potential implications for the cryptocurrency space cannot be ignored.”

Conflicting Opinions on Whether the RESTRICT Act Will Target Individual Users

Despite the complaints, a report published by Daily Dot claims “you will not be jailed for 20 years if you use TikTok after it’s banned — despite internet fear-mongering.” The author of the report, David Covucci, calls the warnings on social media and forums a “nonsensical rumor.” Covucci notes that the use of the term “virtual private network” or VPN is not mentioned in the bill, and the reporter also retrieved a statement from senator Warner’s office.

“Under the terms of the bill, someone must be engaged in ‘sabotage or subversion’ of American communications technology products and services, creating ‘catastrophic effects’ on U.S. critical infrastructure, or ‘interfering in, or altering the result’ of a federal election, in order to be eligible for any kind of criminal penalty,” a Warner spokesperson told Covucci. “To be extremely clear, this legislation is aimed squarely at companies like Kaspersky, Huawei, and Tiktok that create systemic risks to the United States’ national security—not at individual users,” the politician’s spokesperson concluded.

What do you think about the RESTRICT Act and its potential impact on technology, cryptocurrency, and individual freedoms? Share your thoughts in the comments below.

Jamie Redman

Jamie Redman is the News Lead at Bitcoin.com News and a financial tech journalist living in Florida. Redman has been an active member of the cryptocurrency community since 2011. He has a passion for Bitcoin, open-source code, and decentralized applications. Since September 2015, Redman has written more than 6,000 articles for Bitcoin.com News about the disruptive protocols emerging today.