An Indian court has prohibited the crypto platform WazirX from reallocating a user’s XRP to compensate for its losses. The Madras High Court provided interim protection, confirming that users’ digital assets remain their exclusive property under Indian law. This precedent comes as WazirX faces a $235 million loss following a breach in July 2024, prompting the exchange to propose sharing losses among all users.

Court Upholds Crypto Ownership Rights

Justice N. Anand Venkatesh ruled that the approach of distributing the losses should not impair the rights of the XRP holder. One user, possessing 3,532 tokens valued at about $9,400, had purchased them prior to the breach. The judgment emphasized the distinct nature of XRP as separate from other tokens, thereby protecting the holder’s assets from being used to cover operational issues of the exchange.

The court also utilized the Arbitration and Conciliation Act to ensure the user has legal protection until arbitration concludes, requiring WazirX to deposit 956,000 rupees (approximately $11,500) for interim protection.

WazirX Resumes Amid Key Legal Shifts

This ruling coincides with WazirX’s attempts to restart operations after a suspension stemming from the 2024 breach. Following its restructuring plan’s approval backed by almost 95.7% of creditors, the exchange resumed operations last week. Previously, WazirX attributed the security breach to North Korea’s Lazarus Group, revealing vulnerabilities in its multi-signature wallet system. This event forced the exchange offline for an extensive duration, igniting discussions on accountability and asset security in India’s cryptocurrency landscape.

Legal experts view this recent ruling as a sign that Indian courts may increasingly recognize digital assets as legally protected property, following a Bombay High Court decision that rejected similar loss-sharing mechanisms by Bitcipher Labs. These developments could influence future legal disputes as India moves towards clearer regulations regarding cryptocurrencies.