High Court Of Madras Recognised Cryptocurrency As Property Capable Of Ownership And Protection Under Indian Law, While Granting Interim Injunction Under Section 9 Of A&C Act

The High Court of Madras, through its judgment dated 25.10.2025 in Rhutikumari v. Zanmai Labs Pvt. Ltd. & Ors.¹ held that cryptocurrency constitutes a form of property capable of ownership, possession, and being held in trust. The High Court observed that under Section 2(47A) of the Income Tax Act, 1961, cryptocurrency is classified as a "virtual digital asset" and not treated as a speculative transaction.

In the present matter, the Applicant had invested INR 1.98 lakh in January 2024 to purchase 3,532.30 XRP coins on the WazirX exchange operated by Zanmai Labs. Following a cyberattack in July 2024 that froze all user accounts, the Applicant approached the High Court under Section 9 of the A&C Act, seeking protection of her XRP holdings.

The High Court rejected the Respondents' jurisdictional objections, noting that the investments originated in India and the platform was operated domestically and a substantial part of cause of action arose within India. Rejecting the objection based on a foreign arbitration clause, the High Court invoked the proviso to Section 2(2) of the A&C Act to hold that Indian Courts can grant interim protection over assets situated in India, even when the arbitration is seated abroad. Further, the High Court also relied upon Internet and Mobile Association of India v. RBI², to state that cryptocurrency qualifies as property and cannot be subjected to socialisation of losses and High Court rejected the Respondents' plea seeking socialisation of losses, referring to the Bombay High Court's decision in Zanmai Labs Pvt. Ltd. v. Bitcipher Labs LLP³, and held that losses arising from a cyberattack cannot be spread across uninvolved users.

It held that the Applicant's XRP assets were held in a distinct wallet unaffected by the breach, thereby confirming her status as the beneficial owner entitled to protection. Consequently, Zanmai Labs was directed to furnish a bank guarantee or to deposit INR 9.56 lakh in escrow to preserve the value of the Applicant's cryptocurrency until the conclusion of arbitral proceedings.

Footnotes

1 Original Application No.194 of 2025

2 2020 (2) SCR 297.

3 Commercial Arbitration Petition (L) No.11646 of 2025

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