India Court Ruling on Exchange Theft: Officially Recognizes Cryptocurrency as Legal Property

Last Saturday, the Madras High Court in India delivered a landmark judgment, officially confirming that cryptocurrencies constitute a form of property under Indian legal framework.

This ruling stems from a hacking incident at WazirX Exchange in July 2024, where an investor lost Ether and ERC-20 tokens valued at $230 million.

Following the attack, all user accounts, including that investor's, were Frozen. The investor sought legal protection locally in India and sued the parent company of the exchange.

Chief Justice N. Anand Venkatesh stated in the judgment that cryptocurrency is a form of property; it is neither tangible property nor currency, but a type of property that can be enjoyed and owned, and can be held in trust.

The court also recognized that cryptocurrencies possess key characteristics of property, namely identifiability, transferability, and control via private keys. Additionally, the judgment cited provisions from the 1961 Income Tax Act, classifying cryptocurrencies as "Virtual Digital Assets."

Regarding the core dispute in this case, the court dismissed the parent company Zanmai Labs' claim that investors should share the losses from the hacking. The judge emphasized that the XRP tokens held by investors and the ERC-20 tokens stolen in the hacking are entirely different types of cryptocurrencies and should be treated separately. This ruling sets an important precedent for protecting the rights of cryptocurrency investors.

On jurisdiction, the court clarified that Indian judicial authorities have jurisdiction over crypto assets located within the country and are not bound by Singapore arbitration rules. The judge specifically pointed out that since the investor's transactions took place in Chennai, using Indian bank accounts, and Zanmai Labs is registered with India's financial intelligence department, the case should fall under Indian court jurisdiction.

Meanwhile, the judge called on Web 3 platforms to uphold higher corporate governance standards, including independent custody of client funds, conducting independent audits, and establishing strict KYC and anti-money laundering protocols.

In summary, this ruling by the Madras High Court not only provides authoritative recognition of the legal status of cryptocurrencies in India but also points the way for the regulated development of the country's digital assets market.

#数字财产权 # Web 3 Governance