Crypto is defined as property with fiduciary protections by the ruling, which prevents WazirX from diluting user holdings after a $234 million cyberattack.
A win was achieved by XRP holders in India after it was determined by a court that cryptocurrencies qualify as property under law, signifying one of the nation’s most explicit legal recognitions of digital asset possession.
WazirX, which is India’s largest crypto exchange, was barred by the Madras High Court on Friday from reallocating a customer’s 3,532 XRP holdings to compensate for losses from a $234 million cyberattack that impacted the platform in July of the previous year.
It was stated by Justice N. Anand Venkatesh that the user’s XRP tokens, which were purchased in January and unaffected by the event, could not be diluted under the exchange’s “socialization of losses” strategy.
“It is not a tangible property nor is it a currency,” Justice Venkatesh wrote. “However, it is a property, which is capable of being enjoyed and possessed in a beneficial form.”
Legal standing is granted by the decision to crypto assets as property capable of ownership and protection under Indian law. It is also established that assets held in custody by exchanges must be treated as client property held in trust.
“This clarity is very helpful: it strengthens consumer protection for crypto-holders, affirms their rights as asset owners, and paves the way for clearer regulatory and fiduciary frameworks in the crypto ecosystem in India,”
Sudhakar Lakshmanaraja, founder of Digital South Trust.
It was noted by Justice Venkatesh that the applicant had “used the WazirX platform through her mobile phone from her ordinary place of residence and was prevented from trading or liquidating her holdings,” which established that crypto assets accessed within India fall under Indian court protection.
“Together, these judgments stand among the first major Indian court decisions on cryptocurrency issues: they are foundational ‘crypto-jurisprudence,’”
Vikram Subburaj, CEO of Indian crypto exchange Giottus.
“For all participants (exchanges, users, regulators), these are signals that the high-tech arena will be held to high standards of governance and protection,”
Subburaj added.
When XRP Isn’t Really Yours
WazirX’s “socialization of losses” plan—a suggestion to distribute the $234 million proportionally across all users—which the judge equated to “a group insurance of a self-help group,” was rejected by the court.
“The foundation of such a proposition is not any provision in the contractual framework between the parties,” thus making it unenforceable against Indian users, was the ruling by Justice Venkatesh.
WazirX’s assertion that its Singapore court-sanctioned restructuring automatically binds Indian users was also rejected by the judge.
The determination contributes to a developing collection of Indian crypto jurisprudence that delineates user safeguards amid the government’s protracted regulatory advancement. The matter succeeds a Bombay High Court decision that rejected comparable loss-sharing provisions by Bitcipher Labs.
WazirX Resumes Operations Amid Partial Fund Disbursements and Verification Delays
It was also coincidentally arrived on the same day that WazirX resumed its activities, with 95.7% endorsement from creditors.
It has so far been reported by users that only 30% of anticipated funds have been received amid frozen accounts and protracted customer verification.
Crypto policy continues to be unbalanced—strictness is maintained on revenue collection with a 30% tax and 1% TDS, yet silence is observed regarding investor rights or regulations for asset ownership.
“Ultimately, courts have become the central stage where the future of digital value is debated,” the judge wrote. “Through each ruling, they are shaping a clearer picture of rights, responsibilities, and trust in the age of decentralization.”
