WazirX is not allowed to redistribute XRP because the Indian court confirms Crypto as its property

XRP holders scored a victory in India after a court ruled that cryptocurrencies qualify as property under the law, marking one of the country’s clearest legal recognitions of digital asset ownership.

The Madras High Court on Friday banned WazirX, India’s largest crypto exchange, from redistributing a client’s 3,532 shares of XRP to offset losses from a $234 million hack that hit the platform in July last year.

Judge N. Anand Venkatesh said the user’s XRP tokens, purchased in January and unaffected by the incident, could not be diluted under the exchange’s ‘socialization of losses’ scheme.

“It is neither a tangible asset nor a means of payment,” Judge Venkatesh wrote. “However, it is a property that can be enjoyed and possessed in an advantageous form.”

The decision grants legal status to crypto assets as property that can afford ownership and protection under Indian law. It also stipulates that assets held in trust by exchanges should be treated as the client’s property in trust.

“This clarity is very helpful: it strengthens consumer protections for crypto holders, affirms their rights as asset owners and paves the way for clearer regulatory and fiduciary frameworks in the crypto ecosystem in India,” Sudhakar Lakshmanaraja, founder of Digital South Trust, told me. Declutter.

Judge Venkatesh noted that the applicant had “used the WazirX platform through her mobile phone from her habitual residence and was prohibited from trading or liquidating her holdings,” establishing that crypto assets accessed within India fall under the protection of the Indian court.

“Together, these rulings are among the first major Indian court rulings on cryptocurrency issues: they constitute fundamental ‘crypto jurisprudence’,” Vikram Subburaj, CEO of Indian crypto exchange Giottus, told me. Declutter.

“For all participants (exchanges, users, regulators) these are signals that the high-tech arena will meet high standards of governance and protection,” Subburaj added.

Not your XRP

The court rejected WazirX’s “socialization of losses” plan – a proposal to distribute the $234 million proportionately to all users – which the judge likened to “a group insurance policy from a self-help group.”

“The basis of such a proposal is not any term in the contractual framework between the parties,” making it unenforceable against Indian users, Justice Venkatesh ruled.

The judge also rejected WazirX’s argument that the restructuring approved by the Singapore court automatically binds Indian users.

The ruling adds to a growing body of Indian crypto case law defining user protections amid the government’s slow regulatory progress. The case follows a Bombay High Court decision that rejected similar loss-sharing measures taken by Bitcipher Labs.

It also arrived on the same day that WazirX has restarted operations, with 95.7% creditor approval.

Users have so far reported receiving only 30% of expected funds amid frozen accounts and customer verification delays.

The crypto policy remains lopsided: strict on revenue collection with a 30% levy and 1% TDS, but silent on investors’ rights or asset ownership rules.

“Ultimately, courts have become the central stage where the future of digital value is debated,” the judge wrote. “With each ruling, they provide a clearer picture of rights, responsibilities and trust in the era of decentralization.”

WazirX did not immediately return Declutter request for comment.