Crypto wallet provider Ledger is facing a class action lawsuit for allegedly misleading customers about the security of its products.
The lawsuit alleges that Ledger marketed its Nano Wallets as a secure solution for storing private keys offline using a "Secure Element" chip within the wallet's hardware. However, in May 2023, Ledger allegedly introduced a new feature called "Ledger Recover" which backs up customers' private keys by extracting seed phrases from Nano Wallets over the internet through a firmware update. This revelation led to outrage among Ledger's customers who felt misled by the company's previous claims of security.
The plaintiffs argue that they purchased the Nano Wallets at inflated prices because of Ledger's inaccurate statements about the wallets' security features. They claim that had they known these statements were misleading, they would not have purchased the devices.
Following the alleged revelations about "Ledger Recover," many users reportedly stopped using Ledger wallets to secure their cryptocurrency and competitor Trezor saw a 900% increase in sales, according to the complaint.
The lawsuit was originally filed in the U.S. District Court for the Southern District of New York in January, but was transferred to Chicago federal court on March 11.