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In a significant ruling for cryptocurrency users in India, the Madras High Court has sided with an individual $XRP holder against WazirX, one of the country’s largest crypto exchanges. The decision highlights growing legal recognition of digital assets as property and sets a precedent for how exchanges can handle user funds in the aftermath of hacks and platform losses.
The Madras High Court in India has granted interim protection to an $XRP holder, preventing WazirX from using the user’s 3,532 $XRP ($9,400) to cover losses from a $230 million platform hack in July 2024.
Justice N. Anand Venkatesh ruled that WazirX’s planned “socialization of losses” – which would have spread the financial impact across all users – cannot apply to the $XRP holder, as the stolen assets were ERC-20 tokens, a different type of cryptocurrency.
The court emphasized that the $XRP remains the user’s property and should not be diluted to offset the exchange’s operational failures.
Under the ruling, WazirX must provide a bank guarantee of 956,000 rupees (around $11,500) or deposit the same into an escrow account until arbitration proceedings are complete.
WazirX had recently resumed operations after Singapore’s High Court approved a restructuring plan backed by 96% of participating creditors. The platform had been suspended for 16 months following a hack attributed to North Korea’s Lazarus Group exploiting a flaw in its multi-signature wallet system.