Quote from: Pmalek on June 07, 2023, 01:21:54 PM

I have no reason to doubt your words, but maybe we should wait for Ledger to release how exactly they envision this system of theirs is supposed to work. More importantly, how and when the encryption will take place. Does the Secure Element have the capacity to encrypt everything on the chip before taking any further actions? Or does the encryption take place in Ledger Live where it could become vulnerable to various attack models?

My point is we do not need to wait on any further information from Ledger.

We already know the following pieces of information:

Quote from: https://www.ledger.com/recover

Once approved, your Ledger Nano X will duplicate, encrypt and fragment your private key into three parts within the Secure Element chip.

Quote from: https://www.ledger.com/recover

These encrypted fragments are securely sent to three independent providers – Ledger, Coincover, and EscrowTech that will store them in Hardware Security Modules (HSMs).

Quote from: https://support.ledger.com/hc/en-us/articles/9579368109597-Ledger-Recover-FAQs

What if I lose my Ledger device that is associated with my Ledger Recover subscription?

Simply get another Ledger device and follow the process to recover access to your wallet.

So in summary:
1 - Your Ledger Nano device creates three encrypted shards
2 - These shards are transmitted to three third parties for storage
3 - The decryption key must also be stored by at least one of these third parties, since you can recover everything using a brand new device.

Therefore, we can deduce that at some point, all the information necessary to recover your seed phrase (shards + decryption key) must be transmitted from your Ledger Nano device to these third parties. The only way for this to happen is via your internet connected computer. It does not matter if the encryption takes place solely within the Nano device, nor does it matter what decryption algorithm is used. All the information must pass through your computer. Therefore, if your computer is compromised, your funds can be stolen.