Absence of Crypto Regulations in India Prevents Justice for WazirX Exploit Victims
On April 16, 2025, the Indian Supreme Court rejected a petition submitted by 54 users affected by the 2024 WazirX hack. The individuals, who lost their assets in the significant ₹2,000 crore ($234 million) cyberattack, were seeking prompt action regarding the issue.
Nonetheless, the highest judicial authority pointed to the lack of a definitive regulatory framework for cryptocurrencies and dismissed the claims against the exchange’s leadership, including co-founder Nischal Shetty, alongside Binance Holdings and Liminal Custody.
The petitioners presented their cases to a bench led by Justice BR Gavai and Justice Augustine Masih, detailing instances of severe negligence, mismanagement of user funds, and inadequate safety provisions that led to the breach.
The Supreme Court expressed that it was “not inclined to entertain the plea,” resulting in the case being dismissed. For the investors, this dismissal has left a bitter feeling, as for many, this was their last option for recourse.
If the
Indian judiciary cannot intervene against #WazirX referencing a “lack of laws & regulations”
Then why are Indian crypto users still subjected to 1% TDS & 30% tax on gains?
So, are we only suitable for taxation without the safety of laws, guidelines, or clear regulations… pic.twitter.com/PVKaqO5X6U
— Ajay Kashyap (@EverythingAjay) April 16, 2025
On July 18, 2024, the infamous Lazarus Group, associated with North Korea, infiltrated WazirX. They took advantage of weaknesses in WazirX’s multi-signature digital wallet setup. The group created fraudulent accounts, manipulated smart contracts, and achieved complete control over the exchange’s assets, eventually draining all resources.
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Supreme Court’s Denial of Petition Highlights Regulatory Deficiencies
In the aftermath of the early 2024 hack, the victims sought legal intervention and approached the Delhi High Court, but without success. Nine months post-hack, the Supreme Court stated while dismissing the petition that it is not the right venue for resolving the issue, underscoring that it falls under policy rather than the judicial domain.
In their request, WazirX users called for the establishment of a Special Investigation Team (SIT) comprising members from the Reserve Bank of India (RBI), Securities and Exchange Board of India (SEBI), the Financial Intelligence Unit (FIU), the National Investigation Agency (NIA), the Central Bureau of Investigation (CBI), and the Serious Fraud Investigation Office (SFIO) to carry out a thorough investigation into WazirX and its related entities.
Additionally, the petition sought an independent team of financial auditors to conduct a forensic analysis of WazirX’s financial records and report to the Supreme Court. The court, however, recommended that the petitioners turn to the Union Government, RBI, SEBI, and CBI for resolution.
Observing the ongoing situation, market participants have pointed out the irony of India imposing a 30% tax on crypto profits while failing to provide recourse for significant incidents, thereby drawing attention to organizations like the RBI and SEBI in this evident regulatory void.
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WazirX May Delay Fund Recovery Process Until May
As legal actions in India regarding this case remain stagnant, WazirX is gradually progressing with its restructuring endeavors. The trading network has initiated a court-directed restructuring process in Singapore following the vulnerability breach in 2024.
The crypto platform asserts that it has received over 90% credit approval for its fund recovery initiative. However, investors anticipate recovering only 45-50% of their lost assets from the cyberattack.
WazirX had previously announced plans to commence its fund redistribution program within a week after court approval. Nonetheless, the company’s latest blog update suggests that delays could influence the timeline, with users speculating that it might be pushed to May.
There’s some FUD suggesting that the WazirX fund distribution is postponed.
Previously, it was mentioned that the next step after the vote is to seek the court’s approval of the scheme. The court hearing is set for May 13.
We’re on track and entirely focused. Please disregard the noise,…
— Nischal (Shardeum)
In response to social media concerns about these delays, co-founder Nischal Shetty confirmed that the court hearing had always been scheduled for the next month.
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Key Takeaways
- The Supreme Court rejected the petition of WazirX hack victims, citing absence of crypto regulations.
- Investors anticipate recovering just 45-50% of the funds lost in the vulnerability breach.
- The Supreme Court noted that the matter is a question of policy, not judicial jurisdiction.
The post Lack Of Crypto Framework In India Keeps WazirX Vulnerability breach Victims From Justice appeared first on 99Bitcoins.
