**Madras High Court Blocks WazirX from Redistributing User’s XRP Under Loss Socialization Plan**
The Madras High Court has issued a landmark ruling, blocking cryptocurrency exchange WazirX from redistributing a user’s 3,532 XRP tokens as part of its loss socialization scheme following a massive hack in July 2024. The security breach resulted in losses of approximately $230 million, triggering the exchange’s restructuring efforts.
**Court Recognizes Cryptocurrency as Trust Property**
Justice N. Anand Venkatesh of the Madras High Court ruled that cryptocurrencies qualify as property capable of being held in trust. This establishes that crypto assets belong to the users and not the exchange, offering a strong legal protection for Indian cryptocurrency holders.
The court directed WazirX’s Indian operator, Zanmai Labs, to furnish a bank guarantee worth about $11,500 — equivalent to the frozen value of the petitioner Rhutikumari’s XRP holdings. This legal acknowledgment marks one of the clearest affirmations of digital asset ownership under Indian law to date.
**User Challenges Exchange’s Loss Socialization Scheme**
The petitioner, Rhutikumari, a long-time WazirX user, contested the exchange’s plan to redistribute her XRP tokens under a “socialized loss scheme.” The restructuring plan was initiated by WazirX’s parent company, Singapore-based Zettai Pte Ltd, after hackers targeted wallets managed by custodian Liminal.
Following the hack, WazirX halted all withdrawals in India and pursued a court-supervised restructuring process in Singapore, where users were to receive recovery tokens and partial repayments. The Singapore High Court approved the plan in early October 2025, which became the foundation for WazirX’s resumption of services.
**Indian Court Asserts Jurisdiction Over Foreign Restructuring**
Justice Venkatesh rejected WazirX’s argument that the Singapore restructuring plan automatically applies to Indian users. The judge pointed out that Rhutikumari accessed WazirX services from India and was barred from trading or withdrawing her holdings, thus falling under Indian court protection.
The judge likened the loss socialization scheme to “a group insurance of a self-help group” and ruled it unenforceable for Indian users since it was not part of the contractual agreements between the parties involved. This sets a precedent that assets held in custody by exchanges must be regarded as client property held in trust.
**Impact on Crypto Property Rights in India**
This ruling is seen as a major step forward for cryptocurrency owners in India, affirming their rights as asset holders and offering stronger consumer protections. Sudhakar Lakshmanaraja, founder of Digital South Trust, stated that the clarity provided by this judgment enhances legal safeguards for crypto users.
Vikram Subburaj, CEO of crypto exchange Giottus, described the verdict as foundational for crypto jurisprudence in India, signaling that the technology sector must adhere to rigorous governance and investor protection standards.
The decision follows a similar Bombay High Court ruling against loss-sharing measures proposed by Bitcipher Labs. Collectively, these cases demonstrate an emerging judicial trend to define and protect user rights while regulatory frameworks in India remain in development.
**Current Regulatory Landscape and User Experience**
India’s crypto policy continues to focus on taxation, including a 30% tax on gains and a 1% tax deducted at source, with investor rights and asset ownership regulations yet to be clearly formulated.
WazirX resumed operations on October 25, 2025, the same day as the Madras High Court ruling, with 95.7% creditor approval of its restructuring plan. However, many users report receiving only about 30% of the funds they expected, along with delays caused by ongoing customer verification processes and account lockouts.
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This landmark judgment by the Madras High Court underscores the evolving landscape of crypto asset rights in India and highlights the judiciary’s role in protecting users amid cross-jurisdictional challenges in the digital asset space.
https://coincentral.com/wazirx-xrp-redistribution-blocked-by-indian-court-after-230-million-hack/
