WazirX banned from redistributing XRP as Indian court recognizes virtual currency as property

A court has ruled that virtual currency qualifies as legal property in India, marking a victory for XRP holders in India and one of the clearest legal recognitions of ownership of digital assets in the country.

The Madras High Court on Friday restrained India’s largest cryptocurrency exchange, WazirX, from redistributing 3,532 XRP held by customers to offset losses from a $234 million hack that hit the platform last July.

Justice N. Anand Venkatesh said that the XRP tokens of users who were purchased in January and were not affected by the incident cannot be diluted under the exchange’s “socialization of loss” plan.

“It is neither tangible property nor currency,” Justice Venkatesh wrote. “But it is property and can be profitably enjoyed and owned.”

This decision gives crypto assets legal status as assets that can be owned and protected under Indian law. It also provides that assets held by the exchange must be treated as customer property held in trust.

“This clarity is extremely beneficial. It strengthens consumer protection for crypto holders, affirms their rights as asset owners, and paves the way for a clearer regulatory and fiduciary framework in the Indian crypto ecosystem,” said Sudhakar Lakshmanaraja, founder of Digital South Trust. decryption.

Justice Venkatesh noted that the applicant “used the WazirX platform through his mobile phone from his usual place of residence and was prevented from trading or liquidating his holdings,” establishing that crypto assets accessed within India are under the protection of Indian courts.

“Taken together, these judgments represent one of the first major court decisions in India on the issue of cryptocurrencies. decryption.

“For all participants – exchanges, users and regulators – these are signals that the tech sector will maintain high standards of governance and protection,” Subraj added.

Not your XRP

The court rejected WazirX’s “socialization of losses” plan (a proposal to distribute $234 million pro rata to all users), which the judge likened to “group insurance for self-help groups.”

Justice Venkatesh ruled that such proposals were unenforceable against users in India because “there is no basis in any provision of the contractual framework between the parties”.

The judge also rejected WazirX’s argument that a reorganization approved by a Singapore court would automatically bind users in India.

The ruling adds to a growing body of crypto jurisprudence in India defining user protections, even as government regulation progresses slowly. The lawsuit follows a Bombay High Court ruling rejecting a similar loss-sharing action by Biccipher Labs.

It also arrived on the same day WazirX has resumed operations; Creditor approval is 95.7%.

The user has reported With accounts locked and customer verification delayed, only 30% of expected funds have been received.

Crypto policy remains polarized, strict on revenue collection with a 30% levy and 1% TDS, but silent on investor rights and asset ownership rules.

“Ultimately, the courtroom has become center stage where the future of digital value is debated,” the judges wrote. “Through each judgment, a clearer picture of rights, responsibilities, and trust in the era of decentralization is being formed.”

WazirX did not return immediately decryption Request for comments.