The National Consumer Disputes Redressal Commission (NCDRC) has declined to hear a case from a group of WazirX investors who suffered losses due to the $234 million crypto hack.
Investors To Approach Supreme Court Next
The commission stated that since crypto transactions aren’t fully regulated in India, it cannot investigate the matter. The NCDRC stated that since cryptocurrencies are neither legal tender nor officially recognized as investment assets in India, the lawsuit’s claim of financial fraud against WazirX lacks legal basis.
The investors’ lawyer, Aman Rehaan Khan plan to approach the Supreme Court next and seek recovery of lost funds and criminal proceedings against the entities and individuals involved.
Some Positives Despite the Setback
The lawyer said that although the decision was a setback, there were some positives. The consumer forum agreed that cryptocurrencies are considered ‘goods’ under the Consumer Protection Act and are also treated as property under the Income Tax Act. The complaint was filed by 40 investors who claim to have lost around INR 12 crore (about $1.4 million) in cryptocurrency.
Crypto isn’t legal tender in India, but the government taxes crypto profits at 30%. All exchanges must register with the Financial Intelligence Unit (FIU) under the finance ministry. The Cryptocurrency and Regulation of Official Digital Currency Bill, 2021 was planned but never introduced, leaving the crypto space unregulated.
Now, the Supreme Court’s decision is awaited. In 2020, it lifted the RBI’s 2018 ban on crypto trading and later criticized the government for not setting clear rules on crypto trading and fraud investigations.
Users to Recover Stolen Crypto by April
Notably, WazirX, led by Nischal Shetty, is planning a major restructuring to help customers recover some of the $234 million lost in the hack.
WazirX recently pledged to return 85% of the lost assets to investors through its Singapore court-approved restructuring plan. The company has held eight online town halls with customers but is yet to announce the next steps.
The plan involves releasing $284 million in liquid assets and issuing recovery tokens to affected users. After rebalancing its liabilities, these assets will be distributed as tokens to creditors. The restructuring also includes reactivating the WazirX platform with a new decentralized exchange and enhanced features. Profits from the first three years after reactivation will be used to buy back recovery tokens.
This plan has been approved by the Singapore Court, and WazirX has completed the rebalancing process, allowing users to claim their stolen crypto by April.
