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Foreign Let's go ahead and bring on Um I believe is this the CTR or the CEO CTO CTO of Ledger this is Charles There we go Charles how's it going I'm good what about your guys yeah well Doing pretty good uh you guys know I've Had I'll go and just be very upfront That's a very harsh word for you guys That did not like Um you know like the the seed phrase Thing the the firmware update where People could you know it could restore Their their seed race Um that was something to me that was a Little troubling but it wasn't Um it wasn't enough for me to tell my Community we're out on Ledger however Right now with the with the temperature Of the government in the United States And it feels like we're heading towards Salem witch trials for crypto to see you Guys say like hey not only do we have This but also like hey the government is For we'd have to give it like that was Too much for me and I know that you guys It seems like from what I've been Hearing and seeing you guys have maybe Reverse course on that but I want to be Fair and give you guys a proper shake And allow you to come on and explain From your perspective the whole Saga and And what you guys are doing from this Point forward because I don't think it's
Unfixable and part of why we make tweets Like this is we want to apply pressure To do things that align with the crypto Ethos so I'm gonna go and let you Charles you know have the floor and um You know we certainly as you're talking I might have some questions and we'll go From there Um yeah sure Um I'm going probably to start with uh Saying that there was a big Communication issue mostly because Um we like first of all we talked about This feature for over over one year and We got mostly positive feedback because It does solve a friction a friction Point and we intended to uh to have a Proper communication explaining how it Works and what are the trade-offs and so On but the problem is we have pushed a Firmware if the female release that will Support the the feature and in the Release note that was mentioned the the Service and every everyone started to Speculate on what the what the service Is and and there was a lot of Misunderstanding around that so maybe I Can start with trying to explain like What's what's the what's the the the Feature so okay from my standpoint there Is there is a two big issue when when You start with with crypto two main Friction point to uh to go to uh to to To enter through crypto and especially
To sell crystal like the first one is Definitely definitely the uh the seed Phrase backup and the second one is Understanding what you are doing when You're about to sign transaction and so On and there's there's two things so I'm Not that easy to uh to understand when You are a tech savvy when you understand Our private key cryptography publicly Cryptography Works uh when you Understand all of this it can it can be Um quite easy to manage your keys when You understand how blockchain works you You can understand what are these Exhibitional string but when you are new In crypto there's a major friction point And uh part of our mission is to provide A technical solution to uh to manage Your crypto in in electricity to be Complete okay let me let me go and let Me go let me sorry for just a second Um obviously guys Ledger is a French Company so obviously Charles has a French accent um you know for sure and So I've got some people in the chat They're saying they can't understand so I just want to like I want to break down What you said so far so catch people up And then we'll we'll go on so what You're saying is is that you know if You're technically Savvy and you know What you're doing with a seed phrase You're not going to have any problems You're going to know to back it up
You're not going to have to worry about Um you know suddenly losing access to Your Ledger however with crypto adoption We're bringing in more people who are Not technically Savvy but yet when you Had what happened with FTX people Understand now like they can't keep it On exchanges and so they've got to find Another solution for custodying their Their crypto but yet they may not be far Advanced enough into crypto to really Even understand what they're doing so The firmware update was to provide a Technical solution for those people who Got in a little over their head so they Don't lose all their crypto right so That's kind of where we're at right now Is that a good explanation you know what You said Yeah I think it's a explanation uh okay I will I will add something like it's Not only a VMware upgrade uh it's a it's A complex it's a complete service so Okay in order to explain it a little bit How it works Um so if you choose uh to use this Service uh it's going to be the Following like you uh will onboard your Device or you will generate your own uh Your own set of of uh see that your your Private keys and then uh you will choose To subscribe to this service you will Create an account with our partners and Then we will you will go through uh an
Identity identity verification process In order you will show your ID card you Will show your face in order for you to Be registered in the in this service so And then you you also have to to pay It's a it's a paying service in order to For people to so your monthly fee it's Like a monthly view or one time V Yeah it's a month yes okay Um And then and then in order to create This backup so you need to take your 24 Words and create a backup somewhere in a Central Manner and this is where you Need the firmware to uh to help on that And so on on the device itself you will Be prompted like are you okay to Initialize this backup uh this backup Process and if you say yes on the device Then you you will have like several Steps to go through but essentially what Will happen inside the device is that Your seat for is will be shorted into Three different shards and these shots Will be encrypted and then they will be Sent to three different partners so each Partner has an encrypted chart and in Order to uh so and so the the process is Finished at this point you have your Device with if you're sit inside maybe You have you have created your 24 word Backup somewhere and you can use your Device as you wish like everything is Completely normal you own your secret
Every five every time you you sign a Transaction you are prompted on your Device you will sign it and so on and Maybe at some point you lose your device You lose your PIN you don't know where Your recovery sheet is and then if if You have nothing nothing more you have Just lost your crypto and unfortunately This is something that that happened Quite often and for these people who Don't want to fall in this kind of Situation like the backup they would Have created before is really helpful Because they they can go through an Identity verification process again so They will log in to their account go Through the identity verification Process twice and then the the backup Providers will Um will send back the shot inside the Device and the device will recombine the Charge in order to recreate the seed Inside the device so this is the overall Process this process is really secure we Are like a security cryptography is Really our job at Ledger we I think we Are quite good at that we we proved it At several occasions so everything is is Really secure and as a user you have to Go through to two different identity Verification process with two different Partners in order for the shots to be Released uh back to your device so this Is the overall so let me so let me okay
So so once again catch everybody up Um perfect yep yep exactly so uh what Your and I have some people in the chat Like saying some really negative stuff I I I I I understand the tension that You're talking about right like the Tension is You've got people losing their seed Phrase to losing all their money and you Guys are trying to figure out a solution For that and you think you you come up With a solution right and I actually Don't have a problem with what you've Said so far because people are having to Opt in for it and they understand what Their what they're signing up for right And so they sign up for this for this uh Program that you get their kyc Information so you know who these people Are so only they can go into the Platform and request the C phrase be re Repair or uh you know brought together From the shards right Um and they get it all put it back Together they get back into their crypto It's an opt-in service there's a tension That exists right now like I said Earlier between People that are new to crypto and doing Stupid stuff and losing their money and Getting burnt and leaving and then our Devices and our wallets that are Supposed to be as user friendly as Possible but yet there's still some
Holes because crypto is still so new and Blockchain is still uh you know Um uh innovating and things like that so You guys saw a problem You try to solve it you allowed it to be Opt-in so if it's allowed to be opt-in That means someone knows what they're Getting it's just like kyc anywhere guys I mean anywhere you do kyc where you're Opting in so let's go ahead and move a Little bit forward to the part where now You guys say well because of this like If somebody's in this program this is The gist of the gist of the quote uh or The the um the implication of the quote Which is okay if somebody options in This program now we've got a way to Restore their seed phrase and we have Their kyc information if the government Comes and subpoenas us for it then we Got to give it to him and and my problem With that or we will give them to it my Problem with that is number one in Crypto we should be fighting we should Not be handing everything over that's What Sam wanted to do Sam Bateman free Want to do a regulation in the United States he wanted to say hey government Just take everything take everything and Sort it out we need to have a spirit of Fighting in crypto a spirit of standing Our ground and a spirit of saying like Look you come from France French Revolution they did the same thing
American Revolution we did the same Thing we're saying no you can't take This from us there are certain things That could be done to apply pressure That could force you into a situation And Eric Voorhees the biggest opponent Ever of kyc had to eventually give in And have people on his platform to kyc But he held out as long as he possibly Could Jesse Powell same way held out as Long as he possibly could they didn't Say hey guys as soon as you want this We'll just give it to you and that that Spirit to me is not the spirit of crypto And I guess also kind of looking at this From a government standpoint a Regulation standpoint like you guys are A French company I know you sell to Americans but I mean the American Government like that's like you know uh If North Korea comes to you and says hey We found this person has a seat phrase We you know give this to us like you're Probably not going to do it it's time People around the world stop bowing down To the American government as well and And to me I think that was what I was so Disappointed in it wasn't the opt-in Service it wasn't the fact you can get The seed phrase uh through someone Opting in it was the spirit of what you Guys were saying that was really really Negative I think you guys have you know Backtracked a little bit on that
Um and have you know maybe have a Different thought right now so kind of Catch us up to you know where where we Are right now with that side of things Um okay so first of all I I want to say That ledger does not have your seed Phrase like your phrase is solid Encrypted in in three different areas uh And uh we like Ledger like technically Ledger can't uh give your situation Because we simply don't have it even Even if you opt into this service I Think this this thing is important to Say because there was some some Confusion around that Um now uh in like in the situation where Like government would ask to release a Specific shot In the situation where like there was There was a terrorist and this kind of Thing uh probably like we like we would Fight against this and the different Provider would fight against this but I I don't know what you read exactly but Probably the the thing is like if there Is like um The government asked and and you have no Choice you have to you have to obey to The lower agenda so I think this this Might be the spirit of of what what has Been uh said but I I don't know what Exactly you you are referring to and by The way so first of all if you if for You in your threat model the government
Is high like this is a high threat and You don't want to to be in this kind of Situation probably the service is not For you there is and it's it's Completely okay like this is the the Secret or you are the the ready to give The choice to give the different options But for some others right this kind of Threat is maybe not that big and they Are okay to deal with it and and finally What I want to say is uh if ever you use Recovery and this is a threat for you You you have another option you can use Your password so you probably know that Uh in in when you are in self-catering You have 24 words but you you can add an Additional passphrase this place for This password can be up to 100 Characters and this passage is not uh Backup this is a this is not the idea so If ever you use recover and you are Afraid of like government supreme what You can do is just add a patch phrase And have a new wallet so if ever the Government or any unauthorized Access happens to your 24 words this Person this entity won't be able to get Access to your wallet because only you Know the passphrase so these are the Different shades of gray the different Way to mitigate the trisk but I I Understand that this is a risk at the End like everyone can choose if this Risk is low or high like this is a this
Is a something really personal and According to this this risk you will Choose to either not use the service or Use it with a set phrase or use it Normally again it's it's up to you Okay so let's let's discuss uh what what Is the hottest issue around everything I Mean everybody in my chat is uh Requesting I ask about this and you talk About it Um there was a tweet a deleted tweet From uh Ledger support Um it said and I want to say this I'm I'm gonna give like kind of my Explanation of what I think this is Saying before I let you speak Um but the Tweet said technically Speaking it is and always has been Possible to write firmware that Facilitates key extraction you've always Trusted Ledger not to deploy such Firmware firmware whether you knew it or Not now in my opinion now obviously this Is deleted because it caused a lot of Ruckus in my opinion I think what this Is saying here is is that with almost Any product we could release a Super Evil update if we wanted to we could Have it Apple could do that to your IPhone they could release an update that Would steal all your data that would Take your seed phrase but it's firmware Here so you would have to manually go in And upgrade the device yourself and this
Is why like with apple I don't ever do The automatic updates I wait to see when Everybody updates I wait to see what Issues come around from that and then Later on I update so even if this is True The point is the user has to actually go In and do the update and so if you wait And you don't do updates immediately When they come out then you'll be fine And if it comes out to this part of the Update then you just don't do the update So that's that's my opinion on that uh Charles I'm gonna let you go ahead and Speak up like why number one why was This tweet deleted and uh kind of break Down what it means I I think this this tweet has been uh Has been deleted because it's a little Bit misleading and it created a lot of Thread and it was unnecessary and the Reality is that when you use a wallet or When you use any kind of software there Was there was a a part of trust there Was there was no there was no choice for That when you use a wallet you rely on The fact that the wallet itself is not Bad issues the wallets itself is is Secure it has been written without Vulnerability this you rely on this and This is an inevitable like if you want To avoid that that means you would have To to build everything from scratch and Even even there you would you would have
To rely on electronic and so on it's It's really impossible to be completely Trustless so this I want to I want to State this really loudly like when you Use any kind of wallet there is a part Of trust we are trying to minimize this Trust as much as possible But there will be always a part of trust You are trusting that the world you use Is not back at all you have to trust That there is no uh like critical Vulnerability inside it and so on Nonetheless we can do several things in Order to minimize uh distrust and for First of all what we are doing we are Going through different Third-party audits like our code is Audited we also went through security Certification like I went I come from a World where like certification or Mandatory to sell your product for Hardware there is no mandate like you Can you can sell uh your your your Wallet without any certification we Decided to go through their Certification we showed everything you Showed the code we showed the device we Gave we gave them everything and at the End they thought that it was Sufficiently Secure there was no Backdoor inside and they gave us Security certifications and and we Obtained certification for all our Product deck in the universe Nano S Plus
And Nano X we got the certification we Go through different regular audits also We have an internal security research Team and and they are they are pretty Good at improving the security of of our Ad and improving the security of um of Of the ecosystem overall and finally Finally we also are using a secure Element And Central event are quite interesting Because they minimize a little bit more The level of trust you need because with The secure element you have like a Secure enclave and it's it's really Really difficult almost impossible to Tamper uh the secure element to extract What's inside and that means that when You do a VMware upgrade when you inject Code inside you have quite good Qualities on what's running inside the Secure element and this is not really The case if you use a general purpose MCU like a regular wallet even even if You put Legend teammates Legitimate firmware inside maybe your Device has been tampered and the the Firmware update that you apply won't be The one you without so there was there Was this kind of a guarantee that is That is provided by a secure element and Finally in order to minimize even more The trust we have decided to act Considerate our open source code map you You have probably noticed this because
We think like transparency is the key For trust so we decided to really is Completely the the white paper Explaining like how the protocol works Like The Ledger recovery protocol all The cryptography like everything is is Well explained and by the way if you Want to implement your own backup Provider service with this white paper You have all the tools you need to do to Do that and and finally we also decided To accelerate our open source code map In order to open source as much as we Can the the firmware that we that we are Using and implementing and we will start With the implementation of recover Inside the device okay so yes you need To trust a little bit Chevrolet provider If it's a software that you you you have You you need to have full trust because Software it can update the code remotely Without you to accepting accepting it so That there was an issue you also have a Security issue with the software wallet And when it's a hardware Edge you also Have to to have a certain level of trust In the hardware in the VMware and and so On so yes that's true you need you need To trust a little bit at the vendor well Um Charles certainly appreciate you Coming on the show I mean obviously this Is a there's been a debacle for you guys Um and uh you know definitely taking a Lot of heat and I appreciate you coming
On the show and facing it I'll say kind Of what I think my audience is saying in The chat Um is that you say that it comes down to Trust and from from a an unbiased Perspective here you're right with any Hardware wallet there is a level of Trust we're not yet to the place in Blockchain and crypto where every single Thing works without trust that's where It's going to go in the future but for Right now that's not where we're at so You do have to extend trust what my Audience is saying is that for the time Being right now Ledger has lost their Trust and I think that it's going to be A road for you guys to build that trust Back and I think I think that you can uh By doing the right things one thing People are saying is that if you have an Update uh that has firmware in it that Does include let's say something Upgrading to the opt-in service then Maybe you guys create two different Firmware updates one for people that Want that service and one for people That don't Um so that's one suggestion that my Audience has been making Um but definitely I you know I wish you Guys luck look we've always loved Ledger We've always supported you guys Um it was a very like sad decision for Me like I couldn't believe I had to say
What I said on Twitter Um but we're going to also take the side Of our audience here and say You know here here in the United States We have a state called Missouri it's Called The Show me State uh and the Reason is when you say something you got To show us and so I think for Ledger as A company Um from this you guys are gonna have to Show us that you guys are still a Trustworthy company and that um you know I think for people to just jump right Back on board I think is is an Unrealistic expectation for you guys Right now but we will certainly give you Guys the the benefit of the doubt and we Will What was that I don't know well we will Give you guys something just crash in my Office uh we oh gosh this Ledger they Just broke in with with ropes they're Coming in like a SWAT team Um but uh we'll certainly give you guys The opportunity to to prove that to us And um you know down the road we uh look Forward to hopefully you guys getting Back on track and uh winning back uh the Trust of everybody Yeah thank you for that Um so you you're correct some part of Trust has been has been lost by by a few People I think it's not deserved and It's mostly I think uh fed around the
Social media that created this Um now as you said we we have Responsibility to uh to win back this Trust and this is what we are doing with Open sourcing uh our stack explaining More uh how her wallet works because Also this is something which was a Little bit surprising for me like uh Some people discovered how well it Worked during this this story so I think We could have done a better job at Explaining uh which works that you still Have to need a level of trust so I I Totally agree we we should have been Better at this so we will do we will be Better at this and even internally I Discovered that all the overall threat Model everything how everything works Was not completely clear for the new Commerce for instance so yes we need to Improve in that because when you Understand when you give a visibility When you give transparency there is There is Less Reason To Doubt there was A The Twist is easier so this is what we We are doing and this is what we will Continue to do so this event Showed us several things the first thing Is the community care about Ledger Because when you have this kind of Reaction that means that there is a lot Of application like the community cares About register that was really touching For me and the second thing like in
Terms of communication we definitely Need to improve our at explaining how uh Our product works at explaining uh what Are the new features and and so on and Um and yes yeah and yeah and finally Finally I think there's events uh forced Us a little bit to accelerate our open Source run up and I'm the first to be to Be happy of that right well I'll just I'll just end with this Um I understand everything you're saying Nobody nobody understands being Misportrayed and being caught in social Media fud that you should not have been A part of more than me I promise I'm I'm Involved in stuff all the time I have to Defend my reputation like with the FTI X Lawsuit right I'd have been my Reputation for something I actually did 100 the right thing on and I'm being Accused of the wrong thing but I still Am finding myself in a situation where I'm having to defend myself and what I've learned over the years of being Mis Portrayed on social media uh is that Some of it is my fault some of it is the Way that I talk some of it is my tone Some of it is uh you know uh associating Myself with people that end up getting Me in trouble even though I had good Intentions I was too trusting but with Each one of these things that I've done I've had to go back and take a look in The mirror and try to figure out even
Though I should not have been involved in this And I should not have been blamed for This what can I learn from it I think That's what you're saying is you guys Have taken a look at the mirror and you Guys are are doing that thing so I Continue to uh I urge you to continue to Do that and uh you know we'll we'll see How the Ledger plays out over the next Few years and uh Charles thank you for Coming on Yeah thank you for this message and this Is definitely what I what I and we Learned during this this episode so yeah And thank you thank you for having me Absolutely thank you for coming on all Right we'll talk to you later Charles Bye Thank you All right