Madras High Court: While considering an application seeking interim protection alleging that the applicant’s 3,532.30 XRP coins on the WazirX platform operated by Zanmai Labs (P) Ltd. (‘the Company’) were wrongfully frozen following a cyber-attack; a Single Judge Bench of N. Anand Venkatesh, J., stated that there can be no doubt that “crypto currency” is a property. It is not a tangible property nor is it a currency. However, it is a property, which is capable of being enjoyed and possessed (in a beneficial form). It is capable of being held in trust.
The Court thus allowed the application and held that the applicant is entitled to interim protection under Section 9 of the Arbitration and Conciliation Act, 1996 (‘the Act’).
Background:
The present application was filed under Section 9 of the Arbitration and Conciliation Act, 1996 (‘the Act’).
The company, incorporated under the Indian Companies Act, 2013, was operating the WazirX crypto currency exchange platform. In January 2024, the applicant invested Rs 1,98,516 in the platform and purchased 3,532.30 XRP coins, which were retained in the custody of the Company. The portfolio account was registered with the applicant’s email and mobile number. The XRP coins were held in trust by the Company, with their value fluctuating based on market conditions and pegged to USD. As of 17-1-2025, the value of the applicant’s holdings was Rs 9,55,148.20.
On 18-7-2024, the company announced a cyber-attack on one of its cold wallets, resulting in the loss of Ethereum and ERC-20 tokens worth USD 230 million. Following this, the applicant’s account was frozen, preventing access or liquidation of her XRP coins. The platform, which was originally operated by Binance since November 2019, had entered into a licence and distribution agreement with the Company for trading services in India. Binance was managing the crypto wallets, while the Company was handling INR wallets through third-party banks.
In August 2022, Binance began distancing itself from the platform, culminating in the termination of wallet and technology support in January 2023. Zettai Pte. Ltd. (‘Zettai’), the original owner, assumed custody of the crypto assets and entered into a licence agreement with Liminal Infrastructure to manage digital wallets. In July 2024, a cyber-attack led to the theft of USD 234 million worth of crypto assets from Liminal wallets. The platform ceased withdrawals and trades, migrated assets to alternative wallets, and initiated restructuring proceedings in Singapore.
Due to insufficient assets to meet user liabilities, Zettai proposed a scheme of arrangement under the Singapore Companies Act. This scheme, which was approved by the Singapore High Court on 13-10-2025, involved transferring platform operations and assets to the Company, updating WazirX accounts, and offering three withdrawal options. The respondents stated that the applicant would be paid on a pro-rata basis under this scheme and sought dismissal of the application. The Company also raised a preliminary objection, asserting that the agreement stipulated Singapore as the seat of arbitration. In response, the applicant contended that part of the cause of action arose within the jurisdiction of the Court, as she had transferred her Indian currency from a Chennai-based bank and accessed the platform through her mobile phone within the Court’s jurisdiction. Though unaffected by the breach, the applicant claimed her access was unjustly blocked, preventing liquidation and thereby necessitating judicial intervention.
Analysis and Decision:
The Court observed that in the case at hand, the WazirX platform was used by the applicant and was operated through her mobile phone from her ordinary place of residence. The applicant was prevented from either trading or liquidating her crypto currency holdings through the WazirX platform. Further, the Court noted that, prima facie, the asset namely the crypto currency was held by her in India by means of the WazirX platform, and she was prevented from using the platform since it was frozen.
It was highlighted that Courts are becoming the central stage where the future of digital value was debated. Through each ruling, they were shaping a clearer picture of rights, responsibilities, and trust in the age of decentralisation. The Court further observed that India, by learning from these experiences, had the opportunity to design a regulatory regime that encouraged innovation while protecting consumers and maintaining financial stability. The Court emphasised that, under Indian law, cryptocurrency is treated as a virtual digital asset, not a speculative transaction, and rejected the Company’s contention regarding the lack of intent to arbitrate, concluding that the applicant would now issue a trigger notice after gaining clarity from the Singapore High Court’s order.
The Court referred to the decision in Internet & Mobile Assn. of India v. RBI, (2020) 10 SCC 274, where the Supreme Court dealt with the question of whether the Reserve Bank of India (‘RBI’) was legally empowered to restrict banking services for those involved in virtual currency transactions. The Court noted that the RBI’s circular issued in April 2018 effectively cut off crypto exchanges and traders from regular banking channels. The Court emphasised that under Indian law, crypto currency was treated as a virtual digital asset and not as a speculative transaction, governed under Section 2(47-A) of the Income Tax Act, 1961.
The Court noted that the relationship between the applicant and the Company was governed by the user agreement, and the applicant had availed crypto currency through the non-P2P method. The applicant had transferred her fiat currency from Kotak Mahindra Bank to the platform, which was converted into crypto currency, falling within the scope of Clause 6 of the user agreement. The Court further observed that to operate crypto currency within India, the service provider was required to be registered as a reporting entity with the Financial Intelligence Unit. In that case, the Company was registered and authorised to handle crypto currency in India, whereas Zettai and Binance were not.
The Court emphasised that the applicant held 3,532.30 XRP coins, whereas the cyber-attack on 18-07-2024 affected ERC 20 coins, which were entirely different and were not held by the applicant. The Court highlighted the moot question of whether losses from ERC 20 coins held in a separate wallet could be adjusted against XRP coins held by the applicant in a different wallet.
The Court expressed complete agreement with the findings of the Bombay High Court in Zanmai Labs (P) Ltd. v. Bitcipher Labs LLP1, which held that virtual digital assets held electronically were meant to be held in trust with a fiduciary duty owed to their owners. The Court noted that if the asset was stored digitally on the WazirX platform and the operation was frozen due to a cyber-attack, whether the asset possessed by the applicant could be eroded due to a security breach and such erosion spread across all users especially when the breach did not affect the applicant’s XRP coins was a matter to be adjudicated under the agreement.
The Court concluded that if, based on the modified scheme of arrangement approved by the Singapore High Court on 13-10-2025, the applicant’s asset stood eroded substantially, she became a vulnerable party entitled to protection. The Court further observed that the core issue whether the liquidation proceedings before the Singapore High Court would bind the applicant was to be dealt with by the Arbitral Tribunal. Therefore, the applicant was certainly entitled to interim protection under Section 9 of the Act.
The Court noted that after the platform was frozen, all parties awaited the outcome of the modified scheme of arrangement before the Singapore High Court, which explained the repeated adjournments of this application. Now that the scheme was approved, the applicant knew her position. Hence, the Court rejected the contention of the Company that the applicant had not issued a trigger notice, stating that this could not be held against her due to the previous uncertainty.
The Court rejected the Company’s contention that the applicant lacked intent to arbitrate and concluded that, having gained clarity from the Singapore High Court’s order dated 13-10-2025, she would now issue a trigger notice. The Court further held that the applicant was entitled to interim protection under Section 9 of the Act.
Accordingly, the Court directed the Company to either furnish a bank guarantee of Rs 9,56,000 in favour of the applicant or deposit the same amount in an escrow account. This protection was to continue until the arbitration proceedings concluded. Therefore, the application was disposed of.
[Rhutikumari v. Zanmai Labs (P) Ltd., 2025 SCC OnLine Mad 9290, decided on 25-10-2025]
Advocates who appeared in this case:
For the Applicant: D. Ravichander
For the Respondents: Satish Parasaran, SC for Vishnu Mohan. Adithya Reddy
Buy Arbitration and Conciliation Act, 1996 HERE
1. Zanmai Labs Private Limited Vs. Bitcipher Labs LLP [Commercial Arbitration Petition (L) No. 11646 of 2025, dt 07.-0-2025]