Aniket PujariNew Delhi: A consumer court has dismissed a class action filed by a group of 40 individuals affected by domestic crypto exchange WazirX losing $233 million in an alleged hack in July last year.
The National Consumer Disputes Redressal Commission (NCDRC) on Thursday noted that cryptocurrencies are neither legal tender nor permitted as an investment asset in India. Hence, the lawsuit’s primary complaint of ‘financial fraud’ alleged against WazirX does not find legal ground in the country, it said.
NCDRC added that it did not have jurisdiction to pass judgement on offshore entities. As the complainants had signed WazirX’s terms and conditions and agreed to pursue resolutions to corporate conflicts under Singapore’s law, the matter cannot be heard under India’s consumer protection regulations, the court said.
Aman Rehaan Khan, the advocate representing the complainants, said the group would approach the Supreme Court in April seeking full recovery of the lost assets.
WazirX on 18 July disclosed that an alleged hack on its platform had led to the loss of $233 million in cryptocurrency holdings, mostly under a crypto token called Ether, the world’s second-most valuable after Bitcoin. WazirX later moved to file for a moratorium against legal prosecution through its Singapore-headquartered parent entity, Zettai Pte Ltd.
Consumers in India filed the class-action with NCDRC on 26 October claiming that WazirX had defrauded its customers in India, Mint had reported.
Nischal Shetty, the face and co-founder of WazirX, did not immediately respond to a request for a comment on the development.
In October, senior executives at WazirX had claimed that the company was looking to recover parts of the stolen funds through investigation agencies, and also for a ‘white knight’—a corporate term for any entity willing to take over WazirX and its entire business, including its liabilities.
This, though, is not the end of the road for customers of the cryptocurrency exchange, who were seeking to recover damages worth close to $1 million at the time of filing.
Khan, the lawyer representing the complainants in court, claimed that there were “positive takeaways” from NCDRC’s verdict—despite the case being clearly dismissed in a 20-page verdict, a copy of which Mint has seen.
“The bench stated that cryptocurrencies come under the definition of goods under the Consumer Protection Act, and fall under the ambit of property under the Income Tax Act,” Khan told Mint.
WazirX, on its part, promised last month to return 85% of all lost assets to investors through its Singapore court-approved restructuring plan. The company has hosted eight online ‘town halls’ with its customers, and is yet to announce the next step before its alleged promise to return the vast majority of the funds comes to fruition.
