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Background
The value of cryptocurrency transactions in India surpassed ₹51,000 crore in the financial year 2024–25, reflecting a 41% year-on-year increase, as evidenced by data placed before Parliament.1 Notwithstanding the Government's explicit disclaimer that crypto-assets and non-fungible tokens (NFTs) remain unregulated and carry significant risks, with no assured regulatory recourse in the event of losses,2 a substantial segment of the population continues to invest in cryptocurrencies.
Against this backdrop of regulatory uncertainty, the Madras High Court (hereinafter referred to as "the Court") was called upon to examine whether a crypto-asset holder was entitled to interim protection under Section 9 of the Arbitration and Conciliation Act, 1996 ("the Act"), notwithstanding the existence of an arbitration agreement providing for a foreign seat and the pendency of restructuring proceedings before the Singapore High Court. This judgement,3 is significant for its articulation of the proprietary nature of cryptocurrency, its treatment of crypto-assets as trust property, and its clarification of the jurisdiction of Indian courts to grant interim relief in transnational crypto-related disputes.
Facts of the Case
Rhutikumari (hereinafter referred to as "the Applicant") invested a sum of INR 1,98,516/- through the WazirX cryptocurrency exchange platform operated in India by Zanmai Labs Pvt. Ltd (hereinafter referred to as "the Respondent") which is a wholly owned subsidiary of M/s.Zettai Pte.Ltd., a company incorporated under the laws of Singapore. Consequently, she acquired 3,532.30 XRP coins, which were reflected in her WazirX account and valued at Rs.9,55,148.20/- as on January 17, 2025. These assets were held within the platform's wallet infrastructure, while the Applicant accessed and managed her holdings through her registered account in India.
In July 2024, WazirX publicly disclosed that one of its cold wallets had been subjected to a major cyber‐attack, resulting in the loss of Ethereum and ERC‐20 tokens amounting to approximately USD 230 million. Following the incident, the platform froze all user accounts, including that of the Applicant, thereby preventing her from accessing, trading, or liquidating her XRP holdings.
The relationship between the parties was governed by a user agreement containing an arbitration clause that provided for arbitration under the rules of the Singapore International Arbitration Centre, with the seat of arbitration at Singapore. In the meantime, the parent entity i.e., M/s.Zettai Pte.Ltd., of the Respondent initiated restructuring proceedings in Singapore, culminating in the approval of a scheme of arrangement by the Singapore High Court. Aggrieved by the freezing of her assets, the Applicant approached the Court under Section 9 of the Act, seeking an injunction restraining interference with her XRP holdings.
Arguments of the Applicant
The Applicant contended that her XRP coins constituted her proprietary assets and were merely held by the platform in a custodial or trust‐like capacity. She argued that the cyber‐attack related to a different category of crypto assets (ERC‐20 tokens) could not justify freezing or reallocating her distinct XRP holdings.
It was further submitted that despite the arbitration agreement specifying a foreign seat, Indian courts retained jurisdiction to grant interim relief since part of the cause of action arose in India. The Applicant had invested Indian currency through an Indian bank account and accessed the platform from within the territorial jurisdiction of the court.
The Applicant also challenged the binding effect of the Singapore scheme of arrangement, asserting that she was not a party to those proceedings and that her individual proprietary rights could not be diluted through a collective restructuring mechanism without her consent.
Arguments of the Respondent
The Respondent raised a preliminary objection regarding maintainability, contending that since the seat of arbitration was Singapore, Indian courts lacked jurisdiction to entertain an application under Section 9 of the Act. It was argued that the crypto wallets were operated and maintained by foreign entities and that the Respondent's role was limited to facilitating INR‐based transactions in India.
Further, the Respondent submitted that the cyber‐attack resulted in a substantial shortfall in platform assets, making it impossible to satisfy all user claims individually. They contended that a scheme of arrangement approved by the Singapore High Court provided a fair and orderly mechanism for pro‐rata distribution among all affected users. According to the Respondent, freezing of accounts was a necessary interim measure to safeguard remaining assets and prevent further losses.
The Respondent also disputed the characterization of the relationship as one of trust, asserting that the platform did not act as a custodian or trustee of users' crypto assets but merely facilitated transactions between users under the contractual framework.
Observations of the Court
The Court rejected the preliminary objection on jurisdiction, holding that Section 9 relief was maintainable notwithstanding a foreign seat of arbitration. Applying the principles laid down in PASL Wind Solutions,4 the Court observed that the Applicant had accessed and operated her crypto assets from India and that the freezing of her account had direct legal consequences within India.
Further, the Court undertook an extensive analysis of the nature of cryptocurrency. It held that although cryptocurrency is neither currency in the traditional sense nor tangible property, it nonetheless constitutes "property" under Indian law. Such digital assets are capable of ownership, enjoyment, and being held on trust.
The Court emphasized that the Applicant's XRP coins were distinct from the ERC‐20 tokens affected by the cyber‐attack and were stored in separate wallets. Losses suffered in relation to one category of digital assets could not be "socialised" across unrelated assets in the absence of a clear contractual or legal basis. The Court found persuasive the reasoning adopted by the Bombay High Court in similar proceedings involving WazirX, which recognized that users' digital assets are held with fiduciary obligations and cannot be appropriated to offset losses arising from other users' holdings.
Lastly, the Court held that the scheme of arrangement approved by the Singapore High Court could not automatically bind the Applicant so as to extinguish or dilute her proprietary rights, particularly when she claimed specific assets held in trust. Pending final adjudication through arbitration, the Applicant was entitled to interim protection to prevent irreparable harm.
Conclusion
The rapid growth of cryptocurrency markets has compelled courts worldwide to confront novel questions concerning the legal nature of digital assets, custodial obligations of exchanges, and the availability of interim remedies. This decision marks a significant development in Indian jurisprudence on cryptocurrency and arbitration. By recognizing crypto assets as property capable of being held in trust, the Madras High Court has reinforced the proprietary rights of individual investors against indiscriminate freezing or redistribution of assets by exchanges. The judgment also clarifies that Indian courts retain a vital role in granting interim relief under Section 9 of the Act, even in cases involving foreign‐seated arbitrations and transnational digital assets. As digital assets continue to occupy an uncertain regulatory space, judicial interventions such as this play a crucial role in balancing innovation, investor protection, and the orderly resolution of disputes in the evolving crypto economy.
Footnotes
1 The Hindu, "Crypto transactions in India crossed ₹51,000 crore in 2024-25, tax collection data shows," available at https://www.thehindu.com/business/Economy/crypto-transactions-in-india-in-2024-25-tax-collection-data-shows/article70372854.ece (December 08, 2025).
2 Press Release, Financial Intelligence Unit (FIU IND) issues notices for non-compliance to 25 offshore Virtual Digital Assets Service providers (VDA SPs) under Section 13 of the Prevention of Money Laundering Act (PML) Act, 2002, Ministry of Finance, Government of India, available at https://www.pib.gov.in/PressReleasePage.aspx?PRID=2173758®=3⟨=2 (October 01, 2025).
3 Rhutikumari v. Zanmai Labs Pvt. Ltd. (O.A. No. 194 of 2025).
4 PASL Wind Solutions Pvt. Ltd. v. GE Power Conversion India Pvt. Ltd. 2021 (7) SCC 1.
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