Indian Court’s WazirX Ruling, A Major Step for Crypto Security – A Wake-Up Call or Limited Fix?

In early October 2025, the Bombay High Court made an important decision impacting India’s cryptocurrency market. The court ruled that WazirX, one of the country’s largest crypto exchanges, must protect millions of dollars in client funds following a major hack in 2024. This decision is crucial for traders, exchanges, and investors, as it raises important questions about security, accountability, and the future of digital asset regulation in India.

The case began on July 18, 2024, when WazirX experienced a cyberattack that led to the loss of about $235 million in ERC-20 tokens. Companies like Bitcipher Labs LLP and Nextgendev Solutions Pvt. Ltd. opposed the restrictions on withdrawing funds that were frozen after the breach, seeking access to their money. Zanmai Labs Private Limited, which operates WazirX, suggested a plan through its parent company, Zettai Pte. Ltd. in Singapore, to spread the losses among all users. However, the Bombay High Court rejected this plan, declaring it unlawful and holding the exchange accountable for safeguarding user assets.

Key Points of the WazirX Ruling

The ruling establishes clear principles for exchange accountability, setting a precedent for India’s crypto industry. The main points include:

This framework clarifies that exchanges in India cannot use offshore structures to avoid accountability, equating their duties to those of traditional financial institutions.

The court’s decision is an important move to build trust in India’s crypto market. It shows both local and international investors that exchanges must legally protect user funds. This ruling could make traders and brokers more confident in using regulated platforms. By requiring funds to be safeguarded, it lowers the risk of users losing everything in a hack. It also emphasizes the need for exchanges to have strong security, clear policies, and transparency when handling user assets. This decision could positively impact the wider crypto market as well. As India’s digital asset industry grows, investor confidence is crucial for attracting investment. Ensuring exchanges are accountable can increase adoption and promote ongoing growth.

The Bombay High Court’s decision regarding WazirX represents a major milestone for India’s crypto ecosystem. By holding exchanges accountable for user funds, rejecting the notion of “socialized losses,” and denying offshore exemptions, the court has strengthened investor protections. This ruling could encourage other exchanges to prioritize security and transparency, contributing to a more stable and trustworthy market. It also demonstrates that the legal system can play an active role in safeguarding digital assets, balancing innovation with protection.

While the decision does not eliminate the risks inherent in cryptocurrency trading, it provides a clear framework for accountability. Moving forward, successful enforcement and adoption of these principles will determine whether this ruling becomes a global standard or remains a localized solution.

India’s crypto market is evolving, and this ruling highlights the importance of strong regulatory frameworks, security practices, and investor protections. Exchanges, traders, and regulators now have a clearer understanding of responsibilities, marking a step toward a more secure and reliable digital asset ecosystem.