The interim order, passed on 25 October by justice N. Anand Venkatesh, granted relief to an investor whose cryptocurrency holdings were wrongfully frozen by WazirX following a massive cyberattack in 2024.
Mint explains what the court said, the broader legal context, and what this means for investors in India’s evolving crypto ecosystem.
What was the case about
The case was filed in early 2025 by a crypto investor Rhutikumari against Zanmai Labs Pvt. Ltd, the Indian operator of WazirX—one of the country’s largest crypto exchanges.
In July 2024, WazirX suffered a major hack in which cybercriminals stole around $230 million worth of Ethereum-based tokens. Following the attack, the exchange froze multiple user accounts, including Rhutikumari’s, even though her 3,532 XRP coins were unrelated to the stolen tokens.
She approached the Madras High Court, arguing that her holdings were her private property and that WazirX had no authority to freeze, mix, or redistribute them as part of its loss-recovery process.
WazirX, in its defence, argued that the case should go to Singapore arbitration and that freezing accounts was a security measure taken in the aftermath of the 2024 hack.
What the court held
The high court ruled in favour of the investor, directing Zanmai Labs to furnish a bank guarantee of ₹9.56 lakh or deposit the equivalent amount in escrow until arbitration concludes.
The court held that cryptocurrencies, though intangible, possess the essential attributes of property since they can be owned, enjoyed, transferred, and held in trust.
“There can be no doubt that cryptocurrency is property. It is not tangible property nor currency. However, it is property capable of being enjoyed and possessed in a beneficial form,” the court observed.
In his reasoning, justice Venkatesh drew from global precedents to support the recognition of cryptocurrencies as property. He cited the landmark New Zealand case Ruscoe vs Cryptopia Ltd, where digital tokens were recognized as property held in trust by an exchange, and the UK case AA vs Persons Unknown, which treated bitcoin as an asset capable of ownership and legal protection.
This makes the Madras High Court order the first judicial recognition in India that cryptocurrencies are legally protectable property.
India’s legal landscape on crypto
India’s relationship with cryptocurrency has been turbulent and inconsistent.
The Reserve Bank of India (RBI) banned banks from servicing crypto entities in 2018, but the Supreme Court struck down the ban in 2020, calling it disproportionate. Since then, crypto has operated in a legal grey area, neither banned nor fully regulated.
The Finance Act 2022 classified crypto as Virtual Digital Assets (VDAs), imposing a 30% tax on gains and a 1% TDS on all trades. In 2023, the Prevention of Money Laundering Act (PMLA) was extended to cover exchanges, mandating KYC and suspicious transaction reporting.
Still, there is no dedicated law or regulator governing the sector.
The RBI remains wary. Former governor Shaktikanta Das had warned investors that crypto “has no underlying value, not even a tulip,” referencing the Dutch tulip bubble. In October, RBI governor Sanjay Malhotra reiterated concerns about crypto’s risks to financial stability, even as India’s CBDC pilot expanded to over seven million users.
Despite regulatory uncertainty, India now leads the world in crypto adoption, with nearly 119 million users, according to CoinLedger and Chainalysis.
What the ruling means for investors
Experts say the ruling offers investors the legal recognition and protection long missing from India’s crypto space, giving them stronger recourse when exchanges act unilaterally.
Stella Joseph, partner at Economic Laws Practice, said the decision allows investors to seek traditional property remedies such as injunctions, escrow preservation, and bank guarantees rather than relying on exchange-driven loss-sharing schemes. “That shift strengthens an investor’s ability to stop unilateral reallocation of assets and to press proprietary claims when wallets are frozen or compromised,” Joseph said.
B. Shravanth Shanker, advocate-on-record at the Supreme Court, noted that the ruling lets investors hold exchanges liable for failing to protect their crypto, even under force majeure clauses, since the court said poor security cannot excuse value loss. Investors can also separate unaffected assets during restructuring and claim refunds for losses not tied to a breach.
“Ruling also gives a firmer footing to lodge claims in insolvency and restructuring proceedings, where crypto can now be treated as an asset of the estate,” said Ashima Obhan, senior partner at Obhan & Associates.
What lies ahead
While the ruling gives crypto investors much-needed legal recognition and protection, the industry is still waiting for clearer government guidelines.
According to Vivek Ramji Iyer, Partner at Grant Thornton Bharat, the ruling adds a new layer of regulatory ambiguity. “Crypto is now treated three different ways: taxed as a virtual digital asset under the Income Tax Act, unrecognised by financial regulators, and now deemed property by the court,” he said.
He warned that the decision also raises GST and input tax credit implications, calling for the government to align its tax, regulatory, and legal stance on the crypto ecosystem to avoid further confusion.
Shilpa Mankar Ahluwalia, partner at Shardul Amarchand Mangaldas & Co., said the next step should be to classify crypto assets by their use case, whether as payment, investment, or asset tokens, to clarify their treatment under Indian law.
