Landmark Indian Court Ruling Halts WazirX’s XRP Redistribution, Affirms Crypto as Property

In a groundbreaking decision, the Madras High Court in India has barred WazirX, a major cryptocurrency exchange, from redistributing 3,532 XRP tokens belonging to user Rhutikumari as part of its "socialisation of losses" plan following a $234 million hack in July 2024. Justice N. Anand Venkatesh ruled that cryptocurrencies qualify as property under Indian constitutional law and can be held in trust, marking a significant legal acknowledgment of digital asset ownership in India. The court also rejected WazirX’s claim that its Singapore-based restructuring overrides Indian jurisdiction, affirming that crypto holdings accessed in India fall under domestic legal protection.

The ruling stems from WazirX’s attempt to spread losses from the hack, which compromised its cold wallet and stole Ethereum and ERC-20 tokens, across all users, including those whose assets remained unaffected. The court ordered WazirX’s Indian operator, Zanmai Labs Pvt Ltd, to provide a bank guarantee of approximately $11,500 to secure the value of the frozen XRP tokens, ensuring they remain with the user. This decision establishes a clear nexus to Indian courts for crypto assets accessed within the country, strengthening legal protections for India’s estimated 20+ million crypto users.

This landmark judgment sets a critical precedent for cryptocurrency ownership and exchange accountability in India, where regulatory frameworks remain underdeveloped despite a 30% capital gains tax and 1% TDS on crypto trades. By recognizing cryptocurrencies as property and asserting jurisdiction over international exchanges operating in India, the ruling enhances investor protections and could shape future crypto regulations. It underscores the judiciary’s role in safeguarding user rights in the absence of comprehensive legislation, offering a robust legal foundation for India’s growing crypto ecosystem.