Indian Court Blocks WazirX from Using Customer XRP to Cover Hack Losses

India’s Madras High Court delivered a landmark verdict on October 25, 2025, blocking WazirX—once the nation’s top crypto exchange—from reallocating customer XRP to offset its $234.9 million July 2024 hack losses. Justice N. Anand Venkatesh ruled cryptocurrencies qualify as “property” under Indian law, held in trust by exchanges, granting an injunction to petitioner Rhutikumari’s 3,532.30 XRP holdings—purchased pre-hack for ₹1.98 lakh and unaffected by the breach.

The July 18, 2024, exploit—linked to North Korea’s Lazarus Group—compromised WazirX’s Gnosis Safe multisig wallet (4-of-6 signatures via Singapore custodian Liminal), draining Ethereum and ERC-20 tokens but sparing XRP. Post-hack, WazirX froze accounts and pursued Singapore restructuring under parent Zettai Pte Ltd, proposing proportional loss-sharing across users—likened by the judge to an invalid “self-help group insurance” lacking contractual basis.

The court asserted Indian jurisdiction over domestic users, overriding foreign approvals and citing precedents like PASL Wind Solutions, ensuring crypto’s identifiability via private keys affords trust protections. This first-of-its-kind recognition bolsters investor rights amid India’s 20 million+ crypto holders and $ billions in exchange volume.

Crypto advocates hailed it as a trust booster. “This affirms exchanges’ fiduciary duties, shielding unaffected assets from hacks,” said analyst Vikram Subburaj of Giottus. X users echoed relief, with @nira_news calling it a “big win” for accountability.

WazirX, FIU-registered and relaunched October 24 with 95.7% creditor nod, plans Recovery Tokens for partial refunds (users at ~30% recovery) and zero-fee trading to rebuild. An appeal looms, but the ruling could spur RBI/FIU audits, asset segregation mandates, and clearer VDA classifications—vital as India debates 30% tax reforms.

In a $2.5 trillion global crypto market, this precedent fortifies emerging ecosystems, prioritizing user sovereignty over platform bailouts and fostering compliant growth.