Top Highlights
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Legal Ownership Affirmed: The Madras High Court ruled that users’ XRP remains their distinct property, reinforcing cryptocurrency’s status as a legally protected asset in India.
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WazirX’s Loss-Sharing Model Blocked: The court blocked WazirX’s plan to allocate user assets to cover its operational losses after a significant security breach.
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Judicial Clarification: Justice N. Anand Venkatesh emphasized that XRP and ERC-20 assets are separate, ensuring the user’s holdings cannot be used to offset the exchange’s failures.
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Path Towards Clearer Regulations: This ruling signals a growing recognition of digital assets by Indian courts, potentially influencing future legal frameworks as the country navigates crypto regulations.
Ripple’s XRP Banned From WazirX for Loss Coverage: Key Legal Developments
An Indian court has recently made a landmark decision regarding Ripple’s XRP. The Madras High Court ruled against WazirX, preventing the exchange from reallocating a user’s XRP to cover losses incurred from a significant exploit. This ruling marks an important moment in India’s evolving cryptocurrency landscape.
The court emphasized that the user’s digital assets, specifically 3,532 tokens valued at approximately $9,400, remain their distinct property. This clarity reinforces that cryptocurrencies are legally recognized as protected assets. Justice N. Anand Venkatesh made it clear that XRP should not be grouped with other digital tokens for recovery purposes. This ruling distinguishes XRP from ERC-20 tokens, reflecting a nuanced understanding of cryptocurrency categories.
WazirX’s troubles arose from a $235 million hack in July 2024. The exchange initially proposed a “socialization of losses” model, aiming to distribute losses amongst all users. However, the court countered this approach, asserting that individual ownership rights take precedence.
In an additional safeguard, the court mandated WazirX to either deposit 956,000 rupees (about $11,500) in escrow or provide a bank guarantee. This interim protection will remain until arbitration proceedings conclude.
This ruling comes at a critical time for WazirX, which recently resumed operations after a 16-month suspension due to the hack. The Singapore High Court approved the exchange’s restructuring plan, supported by nearly 95.7% of participating creditors. WazirX attributed the hack to North Korea’s Lazarus Group, raising questions about security and accountability in India’s crypto market.
Legal experts view this decision as a significant step toward recognizing digital assets as legitimate property within the legal system. Following a similar ruling from the Bombay High Court, India appears to be moving closer to clearer regulations regarding cryptocurrency.
These developments not only impact WazirX but also contribute to shaping the future of cryptocurrency in India. As the market evolves, such legal precedents will influence how digital assets are treated, potentially fostering a more secure environment for investors and users alike.
With these shifts, investors may feel more confident knowing their assets are legally protected, allowing the cryptocurrency sector to thrive.
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This content is for informational and entertainment purposes only and does not constitute financial or investment advice. Cryptocurrency is highly speculative and carries significant risk, including the potential loss of your entire investment. Do not make financial decisions based on this information. Consult a licensed financial advisor before investing. This site does not offer, sell, or advise on cryptocurrency, securities or other regulated financial products in compliance with SEC and applicable laws. Please do your own research and seek professional advise.
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