Unsurprisingly, an Indian court recently ruled in favor of an XRP investor against the crypto exchange. WazirX and provide the merchant with interim protection by preventing the digital asset platform from reallocating the customer’s XRP holdings. In an order issued last Saturday (October 25, 2025) by the Madras High Court, Justice N. Anand Venkatesh ruled that WazirX would not be able to redistribute a user’s XRP assets (valued at around $9,500 at current market prices) to absorb the platform’s losses after a massive $230 million hack/security breach in July last year.
As part of its ongoing restructuring process, digital asset exchange WazirX said it plans to move forward with a “loss socialization” plan, asking customers, including those who do not own ERC-20 tokens, to simply “absorb” a certain portion of the losses in their wallets.
The court judge in India said that the proposed plan should not apply to the user holding XRP tokens in their account, because the stolen cryptoassets were ERC-20 tokens which are considered fundamentally different types of virtual currency.
Unfortunately, this type of socialization of loss recovery strategy should not even be considered for customer funds lost due to a hack or situation beyond their control. This practice should not be encouraged or in any way become normalized or considered standard practice. If these types of approaches persist, customers will lose trust in crypto exchanges in general.
Notably, the recent Indian court ruling focused on fundamental property rights, noting that the said client’s XRP holdings, which were acquired well before the hacking incident, rightfully remain with them and therefore should not be diluted simply to compensate for the exchange’s own shortcomings.
The court also said that crypto assets are considered property under the existing legal and regulatory framework because they can “be owned” by an individual or organization.
The latest decision determined that the client is legitimately entitled to a form of temporary protection in accordance with the country’s current legislation. Arbitration and Conciliation Act. The court judge has now ordered WazirX management to provide a bank guarantee of approximately $11,500 in local currency. Alternatively, they may deposit the same funds into an escrow account as a temporary protection for the client, pending arbitration on the matter.
As reported last week, WazirX resumed its cryptocurrency trading operations after High Court of Singapore giving the green light to its restructuring phase, which would be supported by the vast majority of active creditors.
Last year’s damaging security breach and hack led to a prolonged suspension of the platform. As has been widely reported, the feat was carried out by North Korea. Lazare Groupwhich had targeted a certain vulnerability in the service provider’s multi-sig crypto wallet infrastructure.
Clearly, WazirX’s plans to “socialize” losses are a sign of poor judgment and decision-making. But unlike larger, systemically important exchanges like ByBit, which were also hacked, WazirX simply doesn’t have the resources or industry support to do much better. However, the exchange’s management has also tried to avoid liability as much as possible, as indicated by the general manner in which it has communicated since the incident.
