Industry and legal experts expect fresh petitions to be filed against the crypto exchange at other high courts taking a cue from this interim ruling.
In a new twist for cryptocurrency exchange WazirX, users whose tokens were not stolen in the $230 million hack may challenge the rebalancing scheme in high courts across India, taking a cue from the recent Madras High Court ruling, according to industry and legal experts.
This comes less than a week after WazirX reopened its exchange, after 15 months, to distribute rebalanced tokens among all users, giving them the option to trade, hold, or sell.
“The Madras High Court judgment is unique, and it’s one of a kind,” said Rashmi Deshpande, founder and managing advocate, Fountainhead Legal, who was representing over 65 users in case against WazirX at the Singapore High Court. She said her team too was seeking for a similar judgement.
What is rebalancing of tokens?
WazirX lost nearly 45 percent of its crypto assets worth $234 million in a cyberattack back in July 2024, forcing it to close operations.
According to a third party blockchain analytics tool, Lookonchain, the stolen assets from WazirX included $102 million of Shiba Inu, $52.5 million in Ethereum, $11.24 million in Matic, $7.6 million in Pepe coin, $135 million in Tether, and $3.5 million in Gala.
Over time, the crypto market has seen a boom, leading to an increase in the prices of the existing tokens.
In February 2025, WazirX said that it would be able to make tokens covering approximately 85 percent of creditors balances available once its restructuring scheme gets majority user votes.
The Singapore court’s recent approval followed a re-vote in August, where 95.7 percent of the voting creditors — representing 94.6 percent in value — supported the revised scheme.
What did the Madras HC interim order say?
The interim judgment delivered in the Rhutikumari v. Zanmai Labs Pvt Ltd, Justice N Anand Venkatesh case recognised cryptocurrency as a non-tangible ‘property’ that could be possessed and be held in trust.
The court had further put a stay on redistribution of 3,532.3 XRP (Ripple) tokens purchased by investor at Rs 1,98,516 in January 2024.
The Court was dealing with a plea under Section 9 of the Arbitration and Conciliation Act, 1996, filed by the investor. She had 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.
Now the catch is WazirX in its rebalancing scheme (or socialising of the losses) will be offering only 85 percent of the user’s held tokens, irrespective of whether they were impacted in the theft.
Deshpande told Moneycontrol, “The Madras High Court has relied on the arbitration clause in the User Agreement. It said that if there is a dispute between the users and WazirX platform, that dispute has to be resolved by arbitration.”
Now as per user agreement, the arbitration seat is Singapore, where WazirX’s parent Zettai is also registered.
WazirX operates through two entities, a parent company – Zettai Pte in Singapore and Zanmai Labs in India. Zettai, the parent entity, holds the crypto assets and Zanmai is responsible for the INR funds.
“Madras High Court judgment has said that we have a provision in the Arbitration and Reconciliation Act of 1996, that if there is a property, which is the subject of the arbitration, is in India, then the Indian courts very much have powers to safeguard that property till the arbitration is concluded,” she explained.
A WazirX spokersperson said, “We acknowledge the order passed by the Hon’ble Madras High Court in the matter of Rhitukumari vs. Zanmai Labs Private Limited on October 25, 2025. Our legal team is carefully reviewing the order and will take all necessary steps in accordance with applicable laws and judicial processes.”
“We wish to reiterate that the Scheme has been duly approved by the Court of competent jurisdiction in Singapore, with an overwhelming majority of 95.7% of users voting in favour of the Scheme. The Scheme has become effective from October 15, 2025 and is legally binding on all users of the platform.”
Multiple cases expected against WazirX
While WazirX is trying to cut back on the losses of its users after the unexpected security breach incident, it has rubbed a section of users whose tokens were safe, the wrong way.
Deshpande shared that after the judgement was out on October 25, a lot of the users she had earlier represented had reached out to explore filing petitions in high courts.
“Pursuant to the Madras High Court order a lot of the users may explore filing petitions in Indian courts. Users can file Section 9 applications similar to the one filed in Madras High Court, in high courts of their jurisdictions,” Deshpande said.
Vikram Subburaj, Co-founder and CEO of crypto exchange Giottus believes this verdict could be troubling scenario for WazirX and will see a lot of customers follow suite.
Drop in token valuations
Sathvik Vishwanath, Co-founder and CEO of crypto exchange Unocoin said, “The company (WazirX) isn’t trying to do anything bad, they had suffered a hack and it can happen with any exchange. But the good thing is the court is taking a stand finally. More such issues going to the court will bring more clarity on the law enforcement side of things.”
He added that even though 85 percent of the tokens will be returned to the users depending on their portfolio mix before the hack, a lot of the alternate coins had lost their value in the past one year.
“Users with more alt coins in their portfolio will likely be recovering only about 45-50 percent of the value of their tokens. But those who held Bitcoins will be doing better as the token saw significant surge,” he said.
What industry experts said
“While the Madras High Court’s order is a good one, I don’t know how this arbitration order would play out since it’s registered in a different country. WazirX’s legal team will surely be appealing against this order,” asked Kashif Raza, founder of crypto education platform Bitinning.
Subburaj added that the Madras HC has gone to the depths, calling out crypto as a property or an asset.
“This is very critical as crypto sort of got a definition. This in a way will be a historic judgement as many cases going forward will be referring to this order, and this will be a big starter for lots of things going forward. We haven’t seen crypto related judgements in such depths in India so far.”
