TLDR
- Madras High Court recognizes XRP as property, safeguarding investor assets.
- WazirX cannot redistribute XRP funds after a 2024 cyberattack on the exchange.
- Indian court rejects WazirX’s loss-sharing plan and affirms local jurisdiction.
- The ruling boosts legal protections for crypto holders under Indian law.
In a landmark decision, India’s Madras High Court ruled that cryptocurrencies, including XRP, qualify as property under Indian law. The ruling, delivered on October 27, 2025, has significant implications for the country’s cryptocurrency landscape, especially concerning exchanges and customer protections. This decision has brought clarity to the legal status of digital assets, marking a pivotal moment in India’s growing crypto ecosystem.
Court Prevents Redistribution of XRP Holdings
The Madras High Court’s ruling centered around a legal dispute involving WazirX, India’s largest cryptocurrency exchange. The case arose from a cyberattack in July 2024, which resulted in the theft of approximately $230 million worth of Ethereum and ERC-20 tokens. A customer had purchased 3,532 XRP coins in January 2024. After the hack, WazirX froze the accounts of affected users and attempted to redistribute some of their assets to cover the losses, including the XRP holdings.
Justice N. Anand Venkatesh ruled that WazirX could not redistribute the XRP tokens of the customer in question, as they were purchased before the hack and were unaffected by it. The court noted that XRP, like other cryptocurrencies, qualifies as property and should be treated as such under the law. “It is not a tangible property nor is it a currency; however, it is a property capable of being possessed and enjoyed in a beneficial form,” the judge stated.
Court Affirms Cryptocurrency as Property
The decision marked a critical recognition of cryptocurrencies as legal property under Indian law. Previously, the legal status of digital assets in India had been unclear, with cryptocurrencies often viewed with skepticism by regulators. This ruling clarifies that digital assets, such as XRP, possess ownership rights and are protected as property, thereby adding stability to the emerging market for crypto assets.
The court’s decision is particularly relevant for crypto exchanges and their operations. It reinforces that exchanges holding customer assets are obligated to treat those assets as property held in trust. The judgment establishes a legal framework for safeguarding users’ rights to their digital assets and ensures that platforms like WazirX adhere to proper governance protocols.
Rejection of WazirX’s Redistribution Plan
WazirX had proposed a “socialization of losses” plan, which would have spread the $234 million loss across all users in proportion to their holdings. However, the court rejected this proposal, stating that it lacked any legal basis within the contractual framework between WazirX and its users. Justice Venkatesh described the plan as akin to “a group insurance of a self-help group” and found it unenforceable.
WazirX also attempted to justify its actions by referencing a restructuring order from its Singapore-based parent company. However, the court ruled that such an order did not bind Indian users, emphasizing that Indian courts retain jurisdiction over cases involving assets held within India. This rejection of foreign jurisdiction claims highlights India’s growing role in shaping the regulatory environment for cryptocurrency.
Shaping the Future of Crypto Governance
The ruling calls for stronger corporate governance in the cryptocurrency sector. Justice Venkatesh emphasized that exchanges must adhere to principles similar to those of other financial institutions. He pointed out the necessity for maintaining independent auditing practices, ensuring that customer funds are separated from the exchange’s operational assets, and complying with know-your-customer (KYC) and anti-money laundering (AML) regulations.
The case reflects broader concerns about the governance and regulation of the cryptocurrency industry in India. Despite strict tax measures, including a 30% levy on crypto earnings and a 1% tax deduction at source (TDS), investor rights and asset ownership rules remain underdeveloped.
This court decision could serve as a foundation for future legal frameworks governing cryptocurrencies, offering clearer protections for investors and establishing standards for exchanges.
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