Ripple’s XRP Banned From Being Used by WazirX to Cover Platform Losses

An Indian court has ruled that crypto exchange WazirX cannot reallocate users’ XRP holdings to compensate for its platform losses. The Madras High Court’s decision grants “interim protection” to affected users, confirming that their digital assets remain their private property — a significant milestone for crypto rights recognition in India.

Court Upholds Ownership of Digital Assets

The case originated from WazirX’s proposal to implement a “socialization of losses” policy following a $235 million exploit in July 2024, which the exchange said was caused by a security breach involving North Korea’s Lazarus Group. Under the plan, WazirX sought to spread its losses among users, including those holding assets unrelated to the stolen ERC-20 tokens. Justice N. Anand Venkatesh ruled against this approach, emphasizing that XRP and ERC-20 assets are distinct and cannot be merged for recovery purposes. The plaintiff, who held 3,532 XRP tokens valued at roughly $9,400, acquired them long before the hack and therefore should not bear the cost of operational failures. The court reaffirmed that cryptocurrency qualifies as a form of property protected under Indian law, ensuring that users retain ownership rights even when assets are custodied by exchanges. To secure compliance, the judge directed WazirX to deposit 956,000 rupees (approximately $11,500) in escrow or issue a bank guarantee until arbitration proceedings conclude.

WazirX Rebuilds Operations Amid Legal Shifts

This ruling comes as WazirX works to restore trust following the 2024 hack that left its operations suspended for over 16 months. The exchange recently resumed services after the Singapore High Court approved its restructuring plan, supported by nearly 96% of creditors. Legal analysts say the Madras High Court’s stance strengthens the argument for crypto as a legitimate asset class in India. The decision also aligns with a Bombay High Court ruling earlier this year that rejected similar loss-sharing measures by Bitcipher Labs, signaling a growing judicial trend toward protecting investors in the digital asset space.