Madras High Court recognises cryptocurrency as property under Indian law

The applicant had invested ₹1,98,516 in January 2024 on the WazirX exchange platform operated by Zanmai Labs, purchasing 3,532.30 XRP coins. A portfolio account was allotted to her and registered with her mobile number and email address.

On July 18, 2024, WazirX announced on its website that one of its cold wallets had been compromised in a cyberattack that resulted in the loss of Ethereum and Ethereum-based tokens (ERC-20).

The exchange said it had suffered losses of approximately US$230 million, following which it froze all user accounts including that of the applicant thereby, preventing her from accessing or trading her XRP holdings.

The applicant contended that her assets were distinct from the stolen Ethereum tokens and were held by WazirX as a custodian in trust. She sought an injunction under Section 9 of the Arbitration and Conciliation Act, 1996 to prevent the company from redistributing or reallocating her portfolio.

The respondents, Zanmai Labs and its directors including Nischal Shetty, opposed the plea.

They stated that the exchange’s Singapore-based parent company, Zettai Pte Ltd, had initiated restructuring proceedings after the cyberattack and that a scheme of arrangement approved by the Singapore High Court required all users to share losses on a pro-rata basis.

It was argued that Zanmai Labs merely operated the Indian rupee leg of transactions while the crypto wallets were maintained by Zettai, and that the proceedings in Singapore would determine how assets were to be distributed.