Pascal Gauthier Gave Crypto What It Needs – And Earned Jeers

Crypto wallet company Ledger created a controversial seed recovery service, something newbies truly need, but suffered through a massive backlash.

AccessTimeIconDec 4, 2023 at 1:11 p.m. UTC
Updated Mar 8, 2024 at 6:04 p.m. UTC

Like many crypto execs, Ledger CEO Pascal Gauthier this year learned the type of hard-won lessons that only come from adversity. When the company, one of the largest and most trusted hardware developers in the industry, unveiled a new security feature in May, it ignited a firestorm of criticism.

The idea was simple enough: The Ledger Recover seed phrase recovery service would give "less rigorous crypto users" the ability to reclaim their funds if they ever lost access. Essentially, it's a type of "insurance policy against losing their private keys," an issue that plagues crypto.

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But due to a mix of misunderstanding, paranoia and hyperbole, many crypto users balked at the program and swore off using the Paris-based firm's products. There are good and bad aspects of the Ledger Recover program. For instance, depending on your view, it's worrisome Ledger could share these "sharded" keys (where users and Ledger each keep track) with governments.

However, as a plus, the system would be entirely optional.

(Coldie)

In response to the social media backlash – which included videos of people intentionally destroying their hardware wallets – Gauthier posted a long message. It only made things worse. Instead of patiently explaining the system, like who it is aimed at (neophyte users) and why it is a good idea (neophytes lose keys), Gauthier accidentally stoked the fire.

As ex-CoinDesker David Z. Morris wrote at the time: "The offending comment seems to simultaneously affirm all of the worst fears being floated – and also belittle the worriers for not catching on sooner. Regardless of intent, both 'technically speaking' and 'whether you knew it or not' will be heard as condescending, even dismissive."

Ledger temporarily called off releasing Ledger Recover but in a sign of it being a good idea (and the company knowing it), it waited to roll it out towards the end of the year.

In the long run, the whole spectacle may end up in Ledger's favor, even if many people are still boycotting the company. It was also, invariably, a good thing for the industry as a whole, as is any time the importance of safeguarding secret keys and passphrases becomes a popular topic of conversation.

For Gauthier, the powerful reaction will likely inform his decisions and public communications for the rest of his days. For instance, when announcing layoffs this October affecting 12% of Ledger's global workforce, he penned a long, thought-provoking message that only partook in a little of the corporate, PR sugarcoating you could usually expect when a company has bad news to share.

"Have we been perfect in all matters? No. We have made mistakes along the way. To fail is part of the process. But I sincerely believe the positive outweighs the negative and that we will come out of this bear market stronger together," he wrote.

Ledger has had some ups as well, this year. It closed a $100 million funding round and kept its $1.5 billion valuation (at a time when many raises, if they happened at all, were down rounds, or deals struck at lower valuations than prior deals). Ledger says it has sold 6.5 million of its nano wallets and has hundreds of institutional clients and the responsibility of "securing more than 20% of global crypto assets."

Gauthier joined Ledger in 2015 as a board member, when it was still in its startup phase. A year later, he became chief operating officer and then president after another roll of the calendar. In 2020, he was promoted to his current positions of chairman and CEO.

Earlier in his career, the French national, born in 1976, led a sales division and then served as commercial director at Dooyoo AG. He became a director at Yahoo after the tech giant acquired a different European startup he was working at called Kelkoo. And he rose through the ranks at French streaming company Criteo, becoming COO.

In 2014, Gauthier founded Kaiko, which was originally named Challenger Deep (inspired by the deep sea submarine that explored the Mariana Trench). He's also had advisory roles at crypto startups OpenX and Index Ventures, among others, and established a joint venture between Ledger, Japanese bank Nomura and asset manager Coinshares called "Komainu," which is exploring blockchain use cases.

As a preeminent crypto executive in the European Union, Gauthier also helped steer the groundbreaking policy known as MiCA, the first regulatory ruleset of its kind.

1. Achievement:

Personal: fundraising in a tough market at the beginning of 2023, raising $100 million and retaining our $1.5 billion valuation.

For Ledger: showing focus, resilience and professionalism. The company and the team kept building in 2023 despite tough market conditions. We prepared for the bull market that's yet to come, with a real display of resilience, professionalism and focus.

2. 2024 Goal: to bring a new device to market.

3. Prediction: The industry will start witnessing a new wave of adoption led by real user needs, not just related to market price fluctuations. It will be a cycle of adoption and consumer usage will be the story of the next bull cycle. Teams like Ledger have been building through the bear market for the bull, and we're seeing the reality that more people will continue to use self-custody. More people will own crypto away from centralized exchanges, and experience the true benefits of digital ownership. Let's never forget that is why crypto exists in the first place: to enable anyone to gain full control over their personal value. More use cases will be built on top of every public blockchain and bring concrete value-adds to millions of users.

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Daniel Kuhn

Daniel Kuhn is a deputy managing editor for Consensus Magazine. He owns minor amounts of BTC and ETH.