WazirX Hack Aftermath: User Contests $9,400 XRP Account Freeze

In a notable case, an XRP holder, Rhutikumari, has contested the freeze of her account containing 3,532.30 XRP (valued around $9,400) following a significant hack of exchange WazirX that resulted in a loss of approximately $235 million in assets. The incident has led to a critical ruling by the Madras High Court, which recognized cryptocurrencies like XRP as property under Indian law, granting investors clear rights over their digital assets.

Key Takeaways

Rhutikumari challenges WazirX's freeze of her account amid a large hack.
The Madras High Court ruled cryptocurrencies like XRP as recognizable property under Indian law.
This ruling marks a major advancement for investor rights within India's cryptocurrency market.
The decision aligns India with countries like the US, UK, and Singapore in recognizing digital assets as property.
The ruling has implications for exchanges and investors regarding ownership rights and regulatory frameworks.

User Challenges Account Freeze

The situation began when Rhutikumari, an XRP holder, filed a petition against WazirX after the exchange froze her account containing 3,532.30 XRP, which was valued at approximately $9,400. This action stemmed from WazirX’s response to a hack in July 2024, resulting in a staggering $235 million theft of assets.

To recover from the losses, WazirX proposed a contentious plan known as “socialization of losses,” which aimed to distribute the financial burden evenly among all user accounts. Rhutikumari contested this plan, arguing that it violated her ownership rights.

In defending its position, WazirX claimed that the conflict should be resolved under a restructuring plan approved by the Singapore High Court, which proposed a three-step approach for compensating users based on proportionality. They asserted that, since they do not own user wallets directly, the Madras High Court did not have jurisdiction as the arbitration was based in Singapore. Furthermore, WazirX emphasized that all trading and withdrawals had been halted during the restructuring process.

This prompted the Madras High Court not only to adjudicate Rhutikumari’s account status but also to determine the classification of cryptocurrencies like XRP as personal property under Indian law.

Did you know? XRP can settle cross-border transactions in just three to five seconds, making it one of the quickest digital assets for payments.

Court Sets Important Legal Precedent

In a significant interim ruling, the Madras High Court declared that cryptocurrencies qualify as “property capable of being possessed and held in trust,” thus formally recognizing them in alignment with Indian law.

Justice N. Anand Venkatesh stated that digital assets, such as XRP, are a type of property—intangible yet able to be owned, enjoyed, and held in trust—as opposed to being mere speculative tools. In arriving at this conclusion, he referenced Section 2(47A) of the Income Tax Act and drew upon both Indian legal precedents and international examples, including a notable New Zealand case, Ruscoe v. Cryptopia Ltd.

Despite WazirX's claims that the issue was solely under the jurisdiction of a Singapore court-sanctioned restructuring plan, the Madras High Court maintained that it had jurisdiction. This was based on the fact that Rhutikumari had transferred funds from an Indian bank and accessed the WazirX platform domestically, establishing a local cause of action.

In a temporary measure, the court ordered Zanmai Labs (the Indian company operating WazirX) not to reallocate Rhutikumari’s 3,532.30 XRP and mandated that the exchange provide a bank guarantee of approximately $11,500 until the case is resolved. The ruling establishes ownership of cryptocurrency as a legally protected right in India.

Did you know? Many people think Ripple and XRP are the same; however, Ripple is the company focused on creating blockchain-based payment solutions, while XRP is the decentralized digital asset that enables transactions on the XRP Ledger.

Significance of Ruling for Indian Crypto Holders

The ruling from the Madras High Court signifies a pivotal moment for the cryptocurrency market in India, as it brings much-needed legal clarity. For the first time, a high court officially recognizes a digital asset like XRP as legal “property,” thus granting investors definitive ownership rights.

The Madras High Court's interim ruling safeguards investors by preventing Zanmai Labs from reallocating or liquidating XRP held by users to compensate for losses incurred from hacks or restructurings. This establishes a legal precedent where courts may view crypto assets as owned by customers rather than as unsecured claims against an exchange.

As a result, confidence among Indian investors in XRP is expected to grow due to this newfound legal clarity. Furthermore, this judgment may encourage lawmakers to introduce more straightforward and robust regulations surrounding the ownership rights of virtual digital asset holders. While the implementation of such regulations may take time, it represents a vital initial step.

Aligning India with Global Standards on Crypto Property

The Madras High Court's ruling asserts that cryptocurrencies are indeed property under Indian law, providing legal protection for investors. This decision places India in alignment with other jurisdictions, such as Singapore and the United States, which have also classified crypto assets as property in specific legal contexts.

In the United States, the Internal Revenue Service (IRS) categorizes virtual currencies as property for federal tax reasons. Courts have the authority to freeze wallets, issue injunctions, and seize cryptocurrency under property law. This classification can assist victims of hacks or fraud, as it offers a legal framework for recovery, although actual recovery relies heavily on factors such as traceability, jurisdiction, and cooperation from exchanges.

Similarly, courts in England recognize crypto assets as property, which allows for remedies like injunctive relief and tracing. An important case, AA v. Persons Unknown [2019] EWHC 3556 (Comm), confirmed that cryptocurrencies like Bitcoin can be treated as property due to their definability, identifiability, and transferability—criteria essential for property rights.

While traditional English law divides property into “things in possession” and “things in action,” the court acknowledged that innovative assets such as cryptocurrencies could fit into a third category of personal property. In Singapore, the High Court in ByBit Fintech Ltd v. Ho Kai Xin & Ors [2023] SGHC 199 ruled that crypto assets are “property capable of being held on trust,” establishing a constructive trust over misappropriated digital assets. This underscores that crypto ownership can receive protection equivalent to that of conventional property.

Potential Impact of Property Status on XRP in India

The Madras High Court's acknowledgment of XRP as property could greatly influence the crypto market in India while enhancing investor confidence.

For XRP, bolstered legal protections are likely to increase local demand and strengthen investor trust. As of November 3, 2025, XRP traded at around $2.30, with noticeable resistance near the $2.80 mark. Should this ruling lead to a surge in demand, XRP might break through that resistance threshold.

For cryptocurrency exchanges, this decision may necessitate a reevaluation of their terms of service. They may need to adjust their custody practices and restructuring strategies, as the law now frames users’ tokens as protected property rather than shared assets.

It is essential for investors to comprehend their legal rights. Now, they have reinforced ownership recognition regarding the crypto assets held on exchange platforms. India is positioning itself closer to jurisdictions like the US, UK, and Singapore, a move that could expedite regulatory advancements and promote greater transparency, accountability, and trust in the digital asset landscape.

Did you know? Unlike Bitcoin, XRP utilizes a consensus protocol that demands minimal energy. Some estimates suggest it consumes around 0.0079 kilowatt-hours (kWh) per transaction, in stark contrast to Bitcoin’s hundreds of kWh.

Limitations of India's Groundbreaking Crypto Property Ruling

While the Madras High Court's ruling signifies considerable progress, it has some limitations. Crypto traders should be aware of these constraints.

Specificity: The ruling is an interim order applicable to Rhutikumari's 3,532 XRP alone, which does not automatically extend to all cryptocurrency wallets, tokens, or exchanges.
Asset Classification: The court specified that XRP and comparable assets are not considered “currency” but rather intangible property, raising uncertainties about the classification of other virtual digital assets.
Enforcement and Recovery: Though property status offers potential protective benefits, actual enforcement and recovery depend on the custody practices and transparency of individual exchanges.
Regulatory Landscape: India still lacks a comprehensive legal framework governing cryptocurrency. This ruling is based on judicial interpretation rather than legislative backing, meaning future legal changes might supersede it.
Cross-Border Transactions: International cryptocurrency dealings could add complexity, as protections established in one jurisdiction may not necessarily carry over to another.

By being aware of these limitations, traders can better navigate the evolving landscape of cryptocurrency regulation in India.