Indian Court Recognizes XRP as Property in Historic WazirX Hack Ruling

• Madras High Court rules XRP and crypto qualify as property under Indian law.
• Justice N. Anand Venkatesh presides over the case linked to the WazirX 2024 cyber attack.

The High Court in Madras has taken a monumental decision to recognize XRP and other cryptocurrencies as property under Indian law. The case was presided over by Justice N. Anand Venkatesh and arose from the disastrous cyber attack on the WazirX exchange in July last year. The ruling establishes important precedent related to digital assets ownership rights in the legal architecture of India and provides clarity to cryptocurrency investors throughout India.

The case concerned an investor who bought 3,532.30 XRP tokens for ₹1,98,516 in January, prior to WazirX experiencing the large security breach. This breach caused more than $230 million in losses in Ethereum and ERC-20 tokens, resulting in the exchange indefinitely freezing user accounts

The investor contended that her XRP holdings are separate from stolen Ethereum assets and the exchange is holding them in trust. The investor sought protection under Section 9 of the Arbitration and Conciliation Act to prevent her holdings from being redistributed to other affected users.

Court Rejects Exchange’s Defense

Zanmai Labs, the operator of WazirX, countered the petition by pointing to a ruling from the Singapore courts that mandates all users share hack-related losses in a proportional manner. The exchange argued that Zettai Pte Ltd, a Singapore entity, was subject to its foreign jurisdiction ruling, effectively prohibiting individual claims to assets. Justice Venkatesh rejected the defense absolutely and found that the plaintiffs’ XRP holdings were not implicated by the breach involving Ethereum and should be dealt with separately.

The court cited the Section 2(47A) of the Income Tax Act, according to which cryptocurrencies are categorized as virtual digital assets that have measurable ownership properties. Justice Venkatesh stressed that cryptocurrencies can be recognized, transported, and handled only with the help of private keys, which is why they are a unique type of property in law.

He stated that Indian courts will have jurisdiction over assets based in India, even where there are multiple proceedings over those assets through arbitration anywhere in the world, if the transaction or event gave rise to the commodity was banked through the Indian banking system. This ruling signifies a landmark moment in the developing regulatory framework of cryptocurrencies in India and standards for the protection of investors.

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