From Pretty Good Chat:
"We consider the case of the private key being stolen as very unlikely. The users themselves are not able to access it outside the app, and no other adversary will be able to either"
"We consider the case of the private key being stolen as very unlikely. The users themselves are not able to access it outside the app, and no other adversary will be able to either"
All that said, (T)OTPs have some advantages versus traditional "provably shared-secret, by way of salt+hash+stretching" of traditional passwords.
However if iCloud Keychain is enabled then this opens up the attack surface a lot more.