• The Madras High Court rejected the WazirX recovery fund plan and qualified cryptocurrency as users’ property.
• WazirX has finally started operations after nearly 16 months of no operation. They’re also working in conjunction with the court for a reconstruction plan.

The Madras High Court of India has rejected WazirX’s plan to make use of its users’ holdings to cover part of the company’s losses from a previous hack. Since WazirX faced its major hack in mid-2024, the crypto exchange has been on a long journey of trying to recover funds and continue operation.

Earlier this month, Tronweekly reported that the exchange has officially resumed operations with a recovery plan by the court and free trading fees. Although the recovery plan is still in the books, WazirX tried to make use of users’ funds to make up for losses.  

Court Declares Crypto as Legally Protected Property in India

According to the reports shared, the court stopped WazirX from redistributing a customer’s 3,532 XRP tokens that were bought months before the platform suffered from its $234 million hack. Before the court rejected the plan, WazirX had planned to include these XRP funds as part of a “socialization of losses” policy, basically saying that it wanted to spread the financial damage from the hack across all users.

But the court firmly rejected the idea that users’ crypto assets should be used to pay for company losses.
The judge in charge of the case, Justice N. Anand Venkatesh, explained that while cryptocurrencies are not yet regarded as legal currency, they still count as property that can be owned, controlled, and enjoyed by an individual.

Also Read: WazirX To Resumes Operations After 16-Month Shutdown and Major Hack

In his words, crypto assets are “a property, which is capable of being enjoyed and possessed in a beneficial form.” So this just means that digital assets must be treated as a form of belonging to their rightful owners and not as company property that can be redistributed whenever they are faced with a financial crisis. 

The judge also explained that there was no legal undertaking. The company shared in its user agreement that allowed it to seize or redistribute customer funds. So because of that, its plan to spread losses among users was considered invalid under Indian contract law.

To amplify their points about spreading the fund, WazirX argued that a restructuring plan was approved in Singapore and it should automatically apply to its Indian users, but the court dismissed that argument, emphasizing that the Indian customers are still protected under domestic consumer and property laws, regardless of where an exchange’s headquarters or legal entity is based.

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