The National Consumer Disputes Redressal Commission (NCDRC) has recently declined to take up the case of WazirX investors who suffered losses due to a $234 million crypto hack. The NCDRC stated that crypto transactions are not fully regulated in India, and therefore they do not have jurisdiction to investigate the case. It was also emphasized that cryptocurrencies are not recognized as legal tender or officially sanctioned investment assets in India. This led to the dismissal of the lawsuit against WazirX by the NCDRC.
Aman Rehaan Khan, the lawyer representing the stakeholders, has expressed intentions to take the matter to the Supreme Court in an effort to recover the missing assets and hold accountable those responsible for the hack. Despite the obstacles faced, there is some positive news for the investors. Cryptocurrencies are considered ‘goods’ under the Consumer Protection Act and are also treated as assets under the Income Tax Act in India. This provides a legal basis for the investors to seek redress for their losses.
The government of India does not recognize cryptocurrency as legal tender, but imposes a 30% tax on crypto earnings. Exchanges are required to register with the Financial Intelligence Unit (FIU) under the finance minister’s directive. Although a Digital Currency Bill was drafted in 2021 for cryptocurrency regulation, it has not been enacted, leaving the crypto space without clear regulatory guidelines.
The Supreme Court’s decision on the matter is currently pending. In 2020, the court lifted the Reserve Bank of India’s ban on crypto trading, but the government has yet to establish comprehensive rules for crypto trading and fraud investigations. WazirX’s founder, Nischal Shetty, has announced plans for a legal restructuring to help investors recover a significant portion of the funds lost in the hack by April.
WazirX has committed to returning 85% of the lost holdings to investors through a reorganization plan approved by a Singapore court. The company has held multiple online town halls with customers to discuss the recovery process, but specific details on the next steps have not been disclosed. The reorganization plan involves distributing $284 million in liquid assets and issuing recovery tokens to users, allowing them to claim their lost crypto funds.
The Singapore Court has approved this plan, and WazirX is working to enable all investors to access their funds by April. It is important to note that the information provided here is for informational purposes only and should not be construed as financial advice. Viewers are advised to consult with their financial advisors before making any investment decisions.