Indian court recognizes cryptocurrency as legal tender, bans WazirX from redistributing XRP Token .
On October 27, according to Decrypt, a landmark ruling was just issued by the Madras High Court (India), officially recognizing cryptocurrencies as legal property. This is XEM one of the most important decisions ever in the digital currency field in India - where crypto regulations are still quite vague and controversial.
According to the judgment, the country's largest cryptocurrency exchange, WazirX , is prohibited from redistributing 3,532 XRP Token owned by a customer to cover losses from a $234 million cyberattack that occurred in July 2024. Judge NN Anand Venkatesh made it clear that the XRP was legitimately purchased by users in January and was not involved in the hack, so the exchange has no right to use those assets to "Chia the losses."
The ruling also sets a new legal precedent: all user assets deposited on the exchange are only held on behalf of, and not jointly owned by, the exchange. This means that in the event of an exchange failure, the customer’s assets still belong to the customer and cannot be “socialized” as proposed by WazirX.
Judge Venkatesh likened WazirX ’s “socialized losses” model to a form of “spontaneous group insurance,” calling it a weak argument and lacking in legal merit. He also rejected WazirX ’s claim that the restructuring plan, approved by the Singapore Court, should be automatically enforceable in India, asserting that domestic users are not bound by international judgments until approved in India.
The ruling came on the same day WazirX resumed operations, after 95.7% of creditors agreed to a rehabilitation plan. However, users have so far only received about 30% of their funds due to locked accounts and delays in the Know Your Customer (KYC) process.
The WazirX case is not just a legal issue, but also opens a wide-ranging debate on digital asset ownership in this country of more than 1.4 billion people. Many legal experts believe that with the Madras Court's ruling, India is getting closer to fully recognizing cryptocurrencies as a legal asset, similar to gold or real estate.
