Key Insights
- The Madras High Court blocked WazirX from reallocating a user’s 3,532 XRP to absorb hack losses, granting interim protection.
- The judge ruled crypto qualifies as property and rejected applying loss-sharing to non-ERC-20 holders.
- WazirX must provide a ₹956,000 guarantee or escrow pending arbitration; the platform recently resumed after a $230M Lazarus hack.
CHENNAI, India, Oct. 26 — The Madras High Court has sided with an Indian XRP holder against cryptocurrency exchange WazirX, granting the user interim protection from a proposed plan to redistribute digital assets as part of the platform’s post-hack restructuring.
Justice N. Anand Venkatesh on Saturday barred WazirX from reallocating a customer’s 3,532 XRP holdings—worth about $9,400—to offset company losses stemming from a $230 million exploit in July 2024. The decision prevents the exchange from using the investor’s XRP to “socialize” losses incurred in the attack that crippled India’s largest crypto trading platform last year.
Court affirms crypto as property, rejects “socialized loss” plan
Under its restructuring scheme, WazirX had proposed that all users share the burden of losses through a “socialization of losses” approach, requiring contributions even from those who never held ERC-20 tokens — the type stolen during the hack.
The court found this principle unjustified in the petitioner’s case, noting that XRP and ERC-20 tokens are “completely different cryptocurrencies.” The judge emphasized that the user’s XRP, purchased months before the incident, should not be diluted to absorb operational shortfalls caused by the platform’s own security lapses.
In a ruling that could set an important precedent for digital asset rights in India, Justice Venkatesh held that cryptocurrency qualifies as property, observing that it is “capable of being possessed.” He concluded that the user retains full ownership of the disputed XRP balance.
Citing the Arbitration and Conciliation Act, the judge ordered WazirX to provide interim protection by furnishing a bank guarantee of 956,000 rupees (approximately $11,500) or depositing the equivalent amount into an escrow account pending arbitration.
WazirX has not yet commented on the court’s order.
The ruling comes just a week after WazirX resumed trading operations following a 16-month suspension triggered by the Lazarus Group hack. The Singapore High Court had earlier approved the exchange’s restructuring plan, supported by nearly 96% of participating creditors, paving the way for its phased reopening this month.