Khaitan & Co successfully represented Bitcipher Labs LLP and Nextgendev Solutions Private Limited before the Bombay High Court in a key arbitration dispute concerning virtual digital assets, force majeure implications, and obligations arising under digital platform agreements.
In its order dated 7 October 2025, Justice Somasekhar Sundaresan dismissed petitions filed by Zanmai Labs Pvt. Ltd. (operator of WazirX) under Section 37 of the Arbitration and Conciliation Act, 1996, thereby upholding the Arbitral Tribunal’s directions to secure Bitcipher and Nextgendev’s cryptocurrency assets stored on WazirX through bank guarantees and/or escrow deposits.
The dispute concerned an alleged cyberattack on WazirX in July 2024 which purportedly led to the theft of ERC-20 tokens worth approximately USD 235 million. Rejecting Zanmai’s contention that the losses could be “socialised” across users specifically by way of a scheme of arrangement being proposed by Zanmai’s parent company, Zettai Pte. Ltd., in Singapore, the Bombay High Court held that Zanmai, synonymous with WazirX, under its Broker Agreements with Bitcipher and Nextgendev, remained responsible for safeguarding user assets, and that force majeure could not justify redistribution of losses.
The Bombay High Court also made certain remarks and observations regarding the lack of privity between Zettai and Bitcipher and Nextgendev in relation to the agreements entered into between Zanmai and Bitcipher and Nextgendev and/or any other general users of WazirX. In view of Zanmai’s contentions that Binance, the largest cryptocurrency exchange in the world, was responsible for users’ (including Bitcipher and Nextgendev’s) cryptocurrency assets on WazirX, the Bombay High Court commented that there is no clarity on Binance’s purported role in this regard.
The ruling reinforces custodial accountability in virtual digital asset operations and upholds the Tribunal’s balanced protective measures.
The team comprised of Ravitej Chilumuri (Partner), Aafreen Noor (Senior Associate), and Ishita Mundhra (Associate), and Senior Counsel Venkatesh Dhond and Counsel Shyam Kapadia appearing for Bitcipher and Nextgendev.
