The Madras High Court’s WazirX ruling: Perspectives Beyond Cryptocurrency as ‘Property’

Introduction

The Madras High Court verdict in Rhutikumari v. Zanmai Labs Pvt. Ltd. & Ors. 2025:MHC:2437, has been widely cited for its observation that cryptocurrency in a WazirX wallet constitutes “property”. While this articulation is correct, the real significance of this decision, in our view, lies beyond whether cryptocurrency is “property.” 

This decision addresses how Indian Courts can protect cryptocurrency investors under Section 9 of the Arbitration and Conciliation Act, 1996 (“Act”) when (i) the arbitration is seated abroad, (ii) the crypto assets are in the custody of a foreign entity with whom the investor has no contractual privity, and (iii) the said foreign entity is the subject of a restructuring scheme in a jurisdiction outside India.

Factual background

In January 2024, Rhutikumari, invested about INR 1.98K on the WazirX platform, operated by Zanmai Labs Pvt. Ltd. (“Zanmai”), and acquired 3,532.30 XRP coins, which was credited to a distinct wallet identified with her client ID. A User Agreement was also entered into between Rhutikumari and Zanmai. This Agreement, inter alia, contained a Singapore seated arbitration clause as the dispute resolution mechanism. 

On 18 July 2024, Zanmai made an announcement that one of its cold wallets became the subject of a massive cyber-attack, which resulted in the theft of Ethereum and Ethereum-based tokens (ERC-20) worth roughly USD 230–234 million, about 45% of the platform’s digital asset pool. In response, Zanmai froze trading and withdrawals across the platform, including the Rhutikumari’s XRP wallet, even though her coins were not in the hacked ERC‑20 wallet.​

Thereafter, Zanmai’s Singaporean parent, Zettai Pte. Ltd. (“Zettai”) commenced restructuring proceedings in Singapore. As part of this process, Zettai proposed a scheme of arrangement whereby users’ claims would be satisfied pro‑rata through a supervised distribution. A pro-rata distribution was proposed as there were insufficient tokens to satisfy all user claims in full.

As the Singapore process progressed, Rhutikumari’s concern crystallised that, if she awaited the outcome of the foreign scheme, her asset position could be significantly eroded without her consent. Against this backdrop, she approached the Madras High Court under Section 9 of the Act seeking an injunction restraining Zanmai from redistributing, reallocating, or apportioning her XRP coins on the WazirX platform, pending arbitration. During the pendency of this Section 9 application, the restructuring scheme of Zettai was approved by the High Court in Singapore. 

Position of the parties before the Madras High Court

Rhutikumari’s core argument before the Madras High Court was that her XRP holdings belong to her and were held in trust by Zanmai, with whom alone, she had a contractual arrangement. Further, the cyber-attack concerned different tokens in another wallet and not her wallet or her XRP coins.

On the other hand, Zanmai argued that it was only operating the INR wallet, and custody of the cryptocurrency and the wallet infrastructure was operated by Zettai. Further, it was argued that Zettai had commenced restructuring, and the Singapore High Court had sanctioned a scheme of arrangement under which crypto-users’ claims (including that of Rhutikumari) would be met on a pro‑rata basis. Zanmai argued that, given 95% creditor support for the scheme, Rhutikumari should await distribution under that process. Furthermore, it was argued that the Section 9 application was not maintainable in view of the arbitration being seated in Singapore and the fact that Rhutikumari had shown no real intention to commence arbitration.​

Ruling of the Madras High Court

Objection on maintainability

The High Court rejected the objection on maintainability by relying on PASL Wind Solutions (P) Ltd. v. GE Power Conversion India (P) Ltd. 2021 (7) SCC 1, and held that Indian Courts can grant interim relief under Section 9 even when the arbitration is seated abroad, particularly when the assets of one of the parties is situated in India and the protection of such assets is sought. In this regard, the Court was of the prima facie view that the XRP coins of Rhutikumari were situated in India as she had used the WazirX platform through her mobile phone from her residence which was within the territorial jurisdiction of the Court.

On “intention to arbitrate,” the Court was of the view that Rhutikumari could not be faulted with for not triggering the arbitration until now as none of the parties had clarity on how the proceedings in Singapore High Court would conclude; only after the scheme was sanctioned on 13 October 2025 did Rhutikumari know her actual position. Therefore, it could not be said that she lacked an “intention to arbitration”. Having observed so, the Court went on to emphasise that she would now be expected to issue a notice and commence arbitration.​

Crypto as “Property” 

In an extended doctrinal discussion, the Court, relying on global and Indian jurisprudence, held that cryptocurrency is “property” capable of being held in trust. The Court, relying on the decision of the Bombay High Court in Zanmai Labs v. Bitcipher Labs LLP, also took the view that the holder of the crypto-asset owed a fiduciary duty to the owner of such asset.

Privity and Zettai’s scheme 

On the question of privity and Zettai’s scheme, the Court drew extensively from the Bombay Zanmai decision, endorsing its reasoning to indicate that the contention that Zettai’s Singapore scheme binds all users, including Rhutikumari, who has no contractual privity with Zettai, is open to doubt.

The Court was of the view that whether the Singaporean scheme of Zettai would bind Rhutikumari is a larger issue that would have to be resolved by the arbitral tribunal. The Court also left open, for the arbitral tribunal’s determination, the question whether the XRP coins would stand eroded due to a security lapse and whether such erosion could be validly spread across all users of the platform, especially when such breach did not take place in the XRP wallet. 

The Relief

In view of the binding nature of Zettai’s scheme being circumspect, and the fact that such scheme could potentially erode the value of Rhutikumari’s XRP coins, the Court recognized her as a vulnerable party, who is entitled to interim protection. Accordingly, Zanmai was directed either to furnish a bank guarantee for INR 9,56,000, which is very close to the current value of the XRP coins, or deposit this sum in an escrow account until the conclusion of the arbitral proceedings.

Our Thoughts

While this decision is prima facie and interim in nature, and not a final determination of the issues involved in the matter, it is nonetheless significant. This decision indicates that Indian courts will meaningfully protect Indian crypto-investors through Section 9 reliefs, even where the arbitration seat and crypto-custody infrastructure are offshore, and will not lightly allow a foreign restructuring scheme to “socialise” losses across all users without contractual privity or clear consent. By insisting that Zanmai, as the Indian contracting party, remains accountable notwithstanding Zettai’s Singapore restructuring, the Court signals a more assertive, investor‑protective approach.

Indian subsidiaries cannot rely on group structures to claim that assets were always in someone else’s hands; risk allocation must be clearly contractually engineered, and disclosures must match operational reality.​ Crypto-platform operators, platforms etc. may have to revisit user agreements and disclosure documents to ensure that (a) custody chains are accurately described, (b) rights in force majeure and cyber‑attack scenarios are clear, and (c) any contemplated loss‑sharing or amalgamation across wallets/tokens is expressly consented to by users.

The information contained in this document is not legal advice or legal opinion. The contents recorded in the said document are for informational purposes only and should not be used for commercial purposes. Acuity Law LLP disclaims all liability to any person for any loss or damage caused by errors or omissions, whether arising from negligence, accident, or any other cause.