Somewhat unsurprisingly, a court in India recently ruled in favor of an XRP investor against crypto exchange WazirX and provider the trader with interim protection by preventing the digital assets platform from reallocating the customer’s XRP holdings. In an order issued this past Saturday (on 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 platform losses after a massive $230 million hack / security breach in July of last year.
As a key aspect of its ongoing restructuring process, digital assets exchange WazirX stated that it plans to move forward with a “socialization of losses” plan, asking clients, including customers that don’t have any ERC-20 tokens, to simply “absorb” a certain portion of losses in their portfolios.
The court judge in India said that the proposed plan must not apply to the user maintaining XRP tokens in their account, as the pilfered crypto-assets were ERC-20 tokens that are considered to be fundamentally different types of virtual currencies.
Unfortunately, this type of socializing of losses recovery strategy must not even be considered for any customer funds lost due to any hack or situation out of their control. This practice must not be encouraged or somehow become normalized or thought of as standard practice. Should these types of approaches persist, then customers will lose trust in crypto exchanges in general.
Notably, the Indian court’s recent ruling focused on basic property rights, noting that the said client’s XRP holdings, which were acquired well before the hacking incident, remain rightfully theirs and, therefore, must not get diluted just to make up for the exchange’s own shortcomings.
The court also stated that crypto holdings are considered property under the existing legal and regulatory framework, as they are capable of “being possessed” by an individual or organization.
The latest ruling determined that the customer is rightfully entitled to a temporary form of protection as per the nation’s current Arbitration and Conciliation Act. The court judge has now instructed the management at WazirX to provide a bank guarantee of around $11,500 in local currency. Alternatively, they can deposit the same funds in an escrow account as temporary protection for the client, while awaiting arbitration on the matter.
As reported this past week, WazirX resumed its crypto trading operations following Singapore’s High Court giving the green light to its restructuring phase, which is said to be supported by the vast majority of active creditors.
The damaging security breach this past year and hack resulted in a extended platform suspension. As widely reported, the exploit was carried out by North Korea’s Lazarus Group, which had targeted a certain vulnerability in the service provider’s multi-sig crypto wallet infrastructure.
Clearly, WazirX’s plans to “socialize” the losses is a sign of poor judgement and decision-making. But unlike more prominent and systemically significant exchanges like ByBit, which had also been hacked, WazirX simply does not have the resources or industry backing to do much better. However, the management at the exchange has also tried to avoid accountability as much as possible, as indicated in the general manner in which they have communicated since the incident.