The High Court Of Madras Recognises Crypto Assets As Property; Grants Interim Protection To Investor In WazirX Dispute

Can cryptocurrency be treated as "property" under Indian law, and can Indian courts grant protection to investors whose digital assets are frozen on a crypto exchange? The Hon'ble High Court of Madras ("Court") recently addressed these questions in the case of Rhutikumari v. Zanmai Labs Pvt. Ltd. & Ors.¹ holding that cryptocurrency constitutes 'property' capable of ownership and trust under the Indian law and granting interim protection under Section 9 of the Arbitration and Conciliation Act, 1996 ("Act") to an investor whose digital assets were frozen following a cyber-attack on the WazirX platform.

Background

• Rhutikumari ("Petitioner"), an investor on the WazirX crypto exchange operated by Zanmai Labs Pvt. Ltd. ("Zanmai"), purchased 3,532.30 XRP coins in January 2024 for an investment amounting to INR 1,98,516 (Rupees One Lakhs Ninety-Eight Thousand Five Hundred and Sixteen) and pursuant to such investment, her holdings were reflected in a designated wallet maintained by WazirX.

• In July 2024, WazirX reported a cyber-attack that led to a loss of approximately USD 230 million (United States Dollar Two Hundred and Thirty Million) worth of Ethereum and Ethereum-based tokens (ERC-20). Following the attack, Zanmai froze all user accounts, including the Petitioner's, preventing her from accessing or trading her XRP coins.

• The Petitioner invoked arbitration under the WazirX user agreement, which provided for arbitration under the Singapore International Arbitration Centre ("SIAC") rules, and filed a petition under section 9 of the Act before the Court seeking interim protection against interference with her crypto holdings.

• Zanmai contended that (a) the seat of arbitration being Singapore, ousted the jurisdiction of Indian courts, (b) the crypto assets were held in custody by its Singapore-based parent, M/s. Zettai Pte. Ltd. and therefore beyond Indian jurisdiction, and (c) users were bound by a restructuring scheme approved by the High Court of Singapore following the cyber-attack.

Issues before the Court

1. Whether a petition under Section 9 of the Act is maintainable before an Indian court when the arbitration seat is Singapore.
2. Whether cryptocurrency constitutes "property" capable of ownership and trust under Indian law.
3. Whether the Petitioner's crypto holdings could be subjected to the Singapore restructuring scheme or 'socialisation' of losses arising from the cyber-attack.

Court's Findings

• Maintainability of Section 9 Application:

The Court, relying on the case of PASL Wind Solutions (P) Ltd. v. GE Power Conversion India (P) Ltd.², held that where assets are located in India, and interim protection is sought over such assets, Indian courts have jurisdiction under the proviso to Section 2(2) of the Act. Since the Petitioner's crypto assets were accessed through her mobile phone and held through the WazirX platform in India, the petition under Section 9 of the Act is maintainable.

• Crypto Assets as Property:

The Court conducted an extensive review of global and Indian jurisprudence, including Internet and Mobile Association of India v. Reserve Bank of India³, and the New Zealand High Court decision in Ruscoe v. Cryptopia Ltd. (in Liquidation)⁴ and held that cryptocurrencies, though intangible and not a currency, qualify as 'property'. Citing Ahmed G.H. Ariff v. CWT⁵ and Jilubhai Nanbhai Khachar v. State of Gujarat⁶, the Court observed that cryptocurrency is a property capable of being enjoyed and possessed in a beneficial form and capable of being held in trust.

• Ownership and Fiduciary Duty:

The Court adopted the reasoning of the Bombay High Court in Zanmai Labs Pvt. Ltd. v. Bitcipher Labs LLP⁷ ("Bitcipher ruling"), which recognised that virtual digital assets held electronically are to be maintained in trust by the exchange with fiduciary obligations towards users. The Court held that the applicant's XRP coins were distinct from the ERC-20 tokens affected by the cyber-attack and could not be subjected to a generalised 'haircut' or redistribution under the Singapore scheme.

• Investor Protection and Interim Relief:

Recognising the applicant as a 'vulnerable party' whose holdings had been frozen, the Court directed Zanmai to furnish a bank guarantee or escrow deposit of INR 9,56,000/- (Rupees Nine lakhs and Fifty-Six thousand), being the approximate value of the Petitioner's XRP holdings, as interim protection pending arbitration proceedings.

Conclusion

The High Court of Madras's ruling is among the first in India to explicitly recognise cryptocurrency as 'property' capable of being owned, held in trust, and protected through judicial intervention. By extending relief under Section 9 of the Act over crypto assets despite a foreign arbitration seat mentioned in the user agreement, the Court reaffirmed that Indian courts could safeguard investors' proprietary interests in digital assets, provided the assets are located within India.

The decision also builds upon the Bombay High Court's Bitcipher ruling, rejecting the 'socialisation of losses' theory advanced by WazirX's Singapore-based parent and emphasising the fiduciary responsibility of crypto exchanges towards users. The judgment marks a significant evolution in Indian jurisprudence on digital assets, aligning with global trends treating cryptocurrencies as property while reinforcing India's commitment to protecting investors in the rapidly expanding virtual asset market.

Footnotes

1 2025:MHC:2437

2 2021 (7) SCC 1

3 2020 (2) SCR 297

4 2020 NZHC 728

5 (1969) 2 SCC 471

6 1995 Supp (1) SCC 596

7 Comm. Arb. Pet. (L) No.11646 of 2025

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