Madras High Court Recognizes Cryptocurrency as Property
The Madras High Court in India has made a significant decision regarding cryptocurrency, ruling that tokens held on a crypto exchange constitute 'property' capable of being the subject of trust obligations. This decision is a major development in India's treatment of cryptocurrency and provides useful guidance on how Indian courts may approach digital assets, custodial relationships, and interim protection of crypto holdings.
The case, Rhutikumari vs. Zanmai Labs Pvt. Ltd. & Ors., involved an investor named Rhutikumari who purchased 3,532.30 XRP tokens through the WazirX platform operated by Zanmai Labs. After a cyberattack resulted in losses of approximately USD 230 million, multiple user accounts, including Rhutikumari's, were frozen, restricting access to her XRP holdings.
The court analyzed three key issues: whether a Section 9 Application is maintainable in India despite the existence of a foreign-seated arbitration agreement; whether the Applicant's relationship with Zanmai created a proprietary interest in the cryptocurrency or merely an investment-based contractual right; and whether cryptocurrency constitutes 'property' capable of judicial protection.
The court ultimately ruled that Rhutikumari's interest in her XRP tokens constituted 'property' capable of legal protection under Indian law, drawing on precedents from other jurisdictions such as New Zealand. This decision has significant implications for the treatment of cryptocurrency in India and may contribute to the broader international debate on the treatment of digital assets in cross-border disputes.