XRP officially recognized as property in India: court rules in case against WazirX

Key points:

• The Madras High Court recognized the cryptocurrency XRP as property under Indian law, citing provisions of the Income Tax Act of 1961.
• The court also prohibited the WazirX crypto exchange from using customers’ XRP tokens to compensate for losses from a $230 million hack.
• The ruling establishes a significant legal precedent, confirming ownership rights to crypto assets in India and enhancing investor protection.

The Madras High Court (India) has recognized XRP and other crypto assets as property under Indian law and prohibited the WazirX crypto exchange from using users’ XRP to cover losses from hacking. Judge N. Anand Venkatesh announced the verdict in a case related to a cyberattack on WazirX in July 2024, in which hackers stole $230 million worth of tokens.

Judge Venkatesh stated that the XRP cryptocurrency is recognized as property under Indian law. It can be owned directly or through a trust. The decision is based on the provisions of Section 2(47A) of the Income Tax Act of 1961, which defines crypto assets as virtual digital assets. The court emphasized that XRP has the characteristics of property: it can be identified, transferred, and controlled using private keys.

The course of the proceedings

The lawsuit against WazirX was filed by an investor from Chennai. In January 2024, he purchased 3 532,30 XRP coins for 198 516 Indian rupees. After the WazirX crypto exchange was hacked, user accounts were frozen.

The investor claimed that his XRP assets were not related to the stolen Ethereum and were held in trust by the exchange. He sought legal protection under Section 9 of the Arbitration and Conciliation Act, 1996, to prevent the redistribution of his funds.

WazirX operator Zanmai Labs opposed the lawsuit, citing that its Singapore-based parent company, Zettai Pte Ltd, is subject to a Singapore court order requiring all users to share losses. However, Judge Venkatesh rejected this argument, ruling that the hack only affected Ethereum-based assets, not XRP.

The court’s opinion

The court ruled that Indian jurisdiction was applicable because the XRP transaction was made from a bank account in India. The judge explained that Indian courts have the right to protect assets located within the country, even if the arbitration proceedings are conducted abroad.

He emphasized that Zanmai Labs, registered with the Financial Intelligence Unit (FIU), operates in accordance with Indian standards, unlike its foreign affiliates. He noted that this difference increases the domestic liability of cryptocurrency exchanges operating in India.

Earlier, WazirX announced its return to the market a year after the hack.