Cryptocurrency (Representational image)
The Madras High Court has ruled that cryptocurrency constitutes property under Indian law, confirming that it can be owned, enjoyed, and even held in trust. Delivering the decision in Rhutikumari v. Zanmai Labs Pvt Ltd, Justice N Anand Venkatesh stated, “There can be no doubt that ‘crypto currency’ is a property. It is not a tangible property nor is it a currency. However, it is a property, which is capable of being enjoyed and possessed (in a beneficial form). It is capable of being held in trust.”
The Court was dealing with a plea under Section 9 of the Arbitration and Conciliation Act, 1996, filed by an investor whose holdings on the WazirX platform were frozen following a massive cyberattack in 2024. The applicant had purchased 3,532.30 XRP coins worth Rs 1,98,516 in January 2024 through WazirX, operated by Zanmai Labs. In July of that year, WazirX announced that its cold wallet had been compromised, resulting in the loss of Ethereum and ERC-20 tokens valued at around USD 230 million. The exchange subsequently froze all user accounts, including that of the applicant.
The investor contended that her XRP assets were unaffected by the hack and that WazirX held them in trust as custodian. She therefore sought interim protection against redistribution of her portfolio. WazirX and its directors, including Nischal Shetty, opposed the plea, citing restructuring proceedings initiated by their Singapore-based parent company, Zettai Pte Ltd, and a Singapore High Court-approved arrangement requiring all users to share losses proportionally.
Rejecting this contention, Justice Venkatesh observed that the cyberattack only affected Ethereum-based tokens. “What were held by the applicant as crypto currencies were 3532.30 XRP coins. What were subjected to cyber attack on 18.7.2024 in the WazirX platform were ERC 20 coins, which are completely different crypto currencies not held by the applicant.” The Court therefore held that applying the Singapore restructuring scheme to unrelated assets was “unsustainable.”
In a detailed 54-page judgment seen by Moneycontrol, Justice Venkatesh explored whether cryptocurrency could be treated as property within Indian legal principles. Drawing from Ahmed GH Ariff v. CWT and Jilubhai Nanbhai Khachar v. State of Gujarat, he noted that “property” under Indian jurisprudence includes “every species of valuable right and interest.” Referring to foreign precedents such as Ruscoe v. Cryptopia Ltd (in liquidation) in New Zealand and AA v. Persons Unknown in the UK, the Court observed that cryptocurrencies are definable, identifiable, transferable, and capable of exclusive control through private keys — attributes that confer proprietary character.
The Court also pointed to Section 2(47A) of the Income Tax Act, 1961, which identifies cryptocurrencies as “virtual digital assets.” It said: “In Indian law regime, the crypto currency is treated as a virtual digital asset and it is not treated as a speculative transaction. This is in view of the fact that the investment made by the user is converted into crypto currency, which is capable of being stored, traded and sold.”
WazirX’s argument that the arbitration was seated in Singapore and hence beyond the jurisdiction of Indian courts was also dismissed. Relying on the Supreme Court’s decision in PASL Wind Solutions Pvt Ltd v. GE Power Conversion India Pvt Ltd (2021), the judge held that Indian courts may grant interim protection under Section 9 when assets within India need safeguarding. Since the applicant had transferred funds from her Chennai-based bank account and accessed the WazirX platform from India, part of the cause of action was deemed to have arisen within the territorial jurisdiction of the Madras High Court.
Justice Venkatesh further underlined that Zanmai Labs was registered as a reporting entity under India’s Financial Intelligence Unit (FIU), while its Singapore parent, Zettai Pte Ltd, and its former partner Binance, were not. “In the present case, it is the first respondent, which got registered as a reporting entity and is, therefore, authorized to handle crypto currency in India. Neither the Zettai nor Binance is registered as a reporting entity in India and hence, they are not authorized to handle crypto currency within India or operate the platform,” the Court recorded.
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The judgment also cited Duke Law scholar Lee Reiners’s essay, “10 Things Judges Should Know About Cryptocurrency,” which explains that cryptocurrencies shift trust from institutions to technology — relying on blockchain’s collective verification rather than central authorities. Justice Venkatesh compared digital tokens to dematerialised shares, observing that while both represent beneficial interests held electronically, cryptocurrencies derive their value purely from market perception.
The Court’s reasoning reflected global trends. In the UK, AA v. Persons Unknown had previously recognised Bitcoin as property. Singapore’s cases like Janesh v. Unknown Person and ByBit Fintech Ltd v. Ho Kai Xin similarly affirmed that NFTs and stablecoins can be defined, identified, and stored as property. The US has examined crypto through securities law, particularly in SEC v. Ripple Labs Inc. and SEC v. Terraform Labs Pte. Ltd.
Justice Venkatesh also drew attention to international experiences such as Mt. Gox in Japan, FTX in the US, and Gatecoin in Hong Kong, where failures of governance underscored the need for investor protection. He remarked that crypto exchanges must adhere to robust standards — segregation of client assets, regular audits, and stringent KYC and AML compliance — to build public trust.
Concluding, the Court granted interim protection to the applicant, noting that if her holdings were eroded due to the Singapore restructuring scheme, she would become “a vulnerable party, who will be entitled for a protection.” The injunction restrained Zanmai Labs and its directors from redistributing or reallocating her XRP coins until the arbitral tribunal reaches a decision.