XRP News Today: Indian Court Decision Protects XRP Holder from WazirX Loss-Sharing Plan

Indian court protects XRP holder from WazirX’s loss-sharing plan, affirming crypto as client-owned property and strengthening investor rights in India.

The Madras High Court has barred WazirX from seizing a user’s XRP holdings. This ruling confirms that crypto assets must be treated as the property of the client. This is a huge step to take for digital asset investor rights in India. The decision was preceded by a major exploit of $234 million from a platform.

Madras High Court Affirms Crypto Holdings as Client-Owned Property

In July 2024, major cyberattacks against WazirX. The breach included $234 million of Ethereum and other ERC-20 tokens. Subsequently, the exchange froze the accounts of all users in a short period of time. This, in turn, suggested a controversial “socialization of losses” plan. This plan was a part of a Singapore restructuring proposal. It wanted to spread the entire loss across all users of the platform.

Related Reading: WazirX to Resume Trading After 16-Month Closure Following $230M Heist | Live

This loss-sharing structure was challenged by a Chennai-based user. Specifically, they had bought 3532 units of XRP tokens in 2022. The user claimed that their XRP had nothing to do with the stolen tokens. Therefore, their assets are not to be used to cover the losses of the exchange. This was the crux of the user’s legal argument. The case passed through the Madras High Court system quite rapidly.

On the oher hand, the order was delivered hurriedly by Justice N Anand Venkatesh. The court gave interim protection to the user immediately. Therefore, WazirX is now legally prevented from redistributing the user’s 3,532 XRP in any way. The value of these holdings is estimated to be $9,400. The decision protects client assets that are held in custody by exchanges. They cannot be redistributed to absorb losses of platforms with ease.

Moreover, the court refused to agree to WazirX’s loss-sharing proposal in no uncertain manner. The plan was compared to a group insurance or self-help group. The judge said the user agreement did not contain any such specific clause. However, this made the proposal legally unenforceable under Indian contract law. The decision held domestic laws on consumers strongly.

Court Orders WazirX to Secure XRP Value with Bank Guarantee

Crucially, the court has dismissed WazirX’s case for jurisdiction relatively quickly. The exchange had argued the matter was the domain of a Singapore court. The Indian court ruled that it had authority in the matter. This was because the assets were bought in India. The Indian entity of the exchange is also registered with the FIU.

Significantly, the ruling makes the status of cryptocurrency as legal “property” official in India. Justice Venkatesh said that it is a form of property. This property can be possessed and enjoyed by the owner to his heart’s content. In addition, the landmark judgment brings legal protection to crypto holdings now. This ruling gives them the status of other valuable assets immediately.

In essence, the ruling sets a critical legal precedent clearly. It is the first in India to extend property rights to crypto holders. As a result, this decision greatly enhances the consumer protection mechanism. It confirms the responsibility that exchanges have to be diligent custodians.

Finally, the court ordered WazirX to provide a bank guarantee. This guarantee must include the value of the XRP now. As a result, it will be held subject to final arbitration between the parties. This interim protection ensures the user’s assets are secured to 100 percent. The ruling is a momentous one for Indian crypto law.

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