Summary
- The Madras High Court said it barred WazirX from using customers' virtual assets to recover hacking losses.
- The court stated that cryptocurrencies held by customers, such as XRP, cannot be arbitrarily used to cover the exchange's losses.
- The ruling recognizes virtual assets as legal property and indicates that investor asset protection has been strengthened.
An Indian court has barred the virtual asset (cryptocurrency) exchange WazirX from using customer assets on the platform to cover losses from a platform hacking.
On the 27th (local time), The Block reported that the Madras High Court restrained WazirX from redistributing customer assets to recover the $230 million hacking loss that occurred in July 2024.
The ruling specified that a user's holding of 3,532 XRP (approximately $9,400) could not be used to cover platform-wide losses. The bench stated, "The affected assets are ERC-20 tokens, while XRP is classified as an entirely different cryptocurrency," and found that WazirX's loss-sharing plan could not apply to XRP holders.
The court framed the case as a matter of 'property rights.' In the judgment it said, "The XRP held by a user before the hack is that individual's property and cannot be diluted to make good for the exchange's operational failure." It also recognized virtual assets as "ownable property," clarifying that they can be protected as legal assets.
Accordingly, the court ordered WazirX to deposit 956,000 rupees (approximately $11,500) as a bank guarantee or into an escrow account to protect customers.
The decision is regarded as a representative case in India that recognizes the legal status of cryptocurrencies as property.
Son Min
sonmin@bloomingbit.ioHello I’m Son Min, a journalist at BloomingBit
