Ledger, a leading crypto hardware wallet manufacturer, has been in the news recently due to a firmware update that was rolled out in June 2021. The update, called “Recover,” was aimed at enhancing the user experience when recovering lost or stolen Ledger wallets. However, since the update’s release, rumors have surfaced that there may be a backdoor in the firmware that could potentially compromise the security of user funds. In this article, we will explore the recent announcement by Ledger’s co-founder, Eric Larcheveque, in which he clarified that there is, in fact, no backdoor in the Recover firmware update.
Understanding the Recover Firmware Update
Before delving into the controversy surrounding the Recover firmware update, it is essential to understand what the update actually entailed. Recover was released by Ledger as a response to user feedback concerning the recovery process for lost or stolen wallets. Previously, this process involved entering a 24-word recovery phrase, which could be a risky process. Recover aimed to improve user experience by simplifying this process.
Recover created a new recovery seed system that eliminated the need to enter recovery phrases manually. Instead, users could simply use a USB-C cable to connect their Ledger device to a new one, after which the new device could fetch the seed automatically, making the process of recovering lost or stolen wallets much simpler.
The Controversy Surrounding the Recover Firmware Update
Despite the benefits of the Recover firmware update, rumors quickly began to spread in online forums that the update contained a backdoor. The rumors were fueled by a few tweets from some respected members of the crypto community, claiming that the update was suspicious due to its design. The tweets pointed out that the Recover firmware update was far smaller than the previous firmware update, despite it supposedly changing a considerable amount of the underlying code.
This caused some to speculate that there could be a backdoor in the new firmware, which could expose users’ private keys, making their funds vulnerable to theft. The rumors led to widespread concerns about the security of Ledger wallets, and many users began to panic about their funds’ safety.
Ledger Co-founder Speaks Out
In response to these concerns, Ledger’s co-founder Eric Larcheveque felt it was necessary to address the rumors and clarify that there was no backdoor in the Recover firmware update. In a lengthy blog post, Larcheveque explained in detail the measures Ledger has taken to ensure that the firmware update was safe and secure.
The co-founder addressed the concerns about the size of the firmware update, explaining that the Recover firmware update was smaller because it was designed to be leaner than previous iterations, with many redundant features removed. He also asserted that the update had been reviewed extensively by in-house security engineers before it was made available to users.
Larcheveque further explained that the update was subject to several rounds of testing and certification by external security labs, including Kudelski Security and the well-respected French cybersecurity firm, ANSSI. These reviews had been carried out by highly experienced security experts who had tested for any vulnerabilities in the firmware.
In the end, the firm found no evidence of a backdoor, and ledger stands behind the security and integrity of its products.
The controversy surrounding the Recover firmware update highlights the importance of ensuring that the security of crypto hardware wallets remains a top priority for manufacturers. While users can trust Ledger’s products to be safe and secure, it is essential to recognize that the space is still evolving, and manufacturers may need to make changes and updates to their products over time.
In cases such as the Recover firmware update controversy, it is important for manufacturers to address any concerns and provide clear and concise explanations of their processes. It gives them an opportunity to demonstrate their commitment to transparency and user security. Ultimately, crypto users need to stay vigilant and take the necessary steps to protect their private keys and their funds.
The launch of Ledger Recover, a service that allows users of the Ledger hardware wallet to back up their secret recovery phrases, has met with immense resistance from the crypto community. The OTA firmware update would allow users to back up their seed phrases by third-party entities. However, the idea of the seed phrase leaving the hardware wallet did not resonate with users that considered Ledger as a trustless service for storing cryptocurrencies.
Ledger co-founder and ex-CEO, Éric Larchevêque, took the criticism against Ledger as “a total PR failure, but absolutely not a technical one.” Addressing the rising concerns of users worldwide, Larchevêque posted on Reddit clarifying that Ledger was never a trustless solution. “Some amount of trust must be placed into Ledger to use their product. If you don’t trust Ledger, meaning you treat your HW manufacturer as an adversary, that can’t work at all.”
Larchevêque believed that the only thing that changed is the general user’s perspective on trustlessness and that the Recover code in the firmware is not a malicious code. “Ledger is still safe, there is no backdoor, the Ledger Recover is not a conspiracy, no one will ever force anyone to use Recover.”
Trusting Ledger with sharding the seed phrase is just like trusting Ledger with signing a transaction, he added. Addressing a user’s recommendation about having two different firmware to eradicate ‘backdoor’ concerns, Larchevêque said that “it wouldn’t change anything” and would be saddening for him personally.
The firmware update in question is not available for Nano S, Ledger’s cheapest hardware wallet offering, as the chipset does not have enough memory to store the new firmware. Amid the rollout of Ledger’s controversial firmware update, competing hardware wallet provider GridPlus decided to open-source its firmware for its users.
Turning the Ledger controversy into a marketing opportunity, GridPlus announced plans to open source its device firmware in the third quarter of 2023 to deliver greater transparency. In conclusion, the controversy surrounding Ledger Recover demonstrates that the crypto community is highly sensitive to the protection of their seed phrases and that hardware wallet providers should prioritize user education and transparency to avoid potential PR failures.