What Happened
Madras High Court said cryptocurrency is “property” under Indian law. It gave temporary protection to an investor whose crypto was frozen after a big hacking incident on WazirX. Case Details
- Investor: Rhutikumari
- Bought: 3,532 XRP (~₹1.98 lakh) in Jan 2024
- Platform: WazirX (run by Zanmai Labs)
- Problem: July 2024 hack stole $230 million in Ethereum tokens
- WazirX froze all user accounts, including Rhutikumari’s XRP (which was not stolen)
- She filed case in Madras High Court for relief
Investor’s Side (Rhutikumari)
- Her XRP was safe – not part of the stolen Ethereum. Freezing it was wrong.
- Court can help – even if arbitration is in Singapore, Indian court can protect assets in India under Section 9 of Arbitration Act.
WazirX’s Side (Zanmai Labs)
- Go to Singapore – user agreement says all disputes go to Singapore arbitration.
- We don’t hold crypto – foreign companies (Binance, Zettai) manage it.
- Share the loss – all users should bear the hack loss together (“socialize losses”).
Court’s Decision (Justice N Anand Venkatesh)
| Point | Court Said |
|---|---|
| 1. Crypto = Property | Yes. Not cash, not physical, but still property. Can be owned, held in trust. Backed by Supreme Court cases and Income Tax law (calls it “virtual digital asset”). |
| 2. Indian Court Can Act | Yes. Asset is in India via WazirX platform. Court can protect it even if final case is in Singapore. |
| 3. No “Socializing Losses” | Wrong. Can’t punish safe investors for company’s security failure. No rule in user agreement allows this. |
| 4. Protection Given | WazirX must give bank guarantee or deposit ₹9.56 lakh in escrow to protect investor’s XRP value till Singapore case ends. |
Why This Matters (Strategic View)
- Big Win for Crypto Owners – Courts now treat crypto like property. You can fight to protect it.
- Indian Courts Will Step In – Even with foreign arbitration, local courts can save your assets.
- Exchanges Can’t Just Freeze Everything – Must prove why your safe crypto is blocked.
- Security is Exchange’s Job – Hack loss can’t be passed to innocent users.
Action Steps for Investors
- Keep proof of purchase and wallet balance.
- If account frozen unfairly, file under Section 9 in High Court.
- Push for segregated wallets (your crypto stored separately).
Action Steps for Exchanges
- Improve security – one hack can’t freeze all users.
- Be clear in user agreements – no hidden “share the loss” rules.
- Expect more court cases – build legal defense early.
Bottom Line
Crypto is now legally “property” in India. Investors have rights. Courts will protect them. Exchanges must act fairly and securely.
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