Supreme Court Rulings On Cryptocurrency Wallet Theft
1. Rhutikumari v. Zanmai Labs Pvt Ltd (Madras High Court, 2025)
Facts:
The petitioner held XRP coins in the WazirX exchange wallet.
The exchange suffered a cyberattack in 2024, resulting in significant theft of user crypto assets.
WazirX proposed a “loss-sharing plan” and froze all user accounts.
Judgment:
The Madras High Court recognized cryptocurrency as property under Indian law.
The Court ruled that users’ crypto holdings are trust property, meaning the exchange cannot treat stolen assets as part of its own property.
Interim relief was granted: the exchange was restrained from redistributing the petitioner’s XRP holdings and had to provide a guarantee or escrow equivalent to the value of the holdings.
Significance:
This case establishes that crypto holdings can be treated as intangible property.
It provides a basis for civil remedies like injunctions or proprietary claims, though it does not address criminal liability for theft.
2. Manoj Kumar v. Coinsecure India (Delhi High Court, 2021)
Facts:
Coinsecure, a crypto exchange, allegedly misappropriated user funds.
Several users claimed their wallet balances were not credited or were wrongfully frozen.
Judgment:
Delhi High Court recognized that cryptocurrencies are assets capable of ownership, and users have a claim over them.
The Court emphasized that exchanges act as custodians, and therefore owe a fiduciary duty to users.
Users were allowed to initiate civil claims for recovery of misappropriated crypto.
Significance:
Reinforces the idea that crypto exchanges cannot arbitrarily freeze or use user funds.
Establishes fiduciary responsibility of exchanges.
3. Subramanian v. WazirX (Madras High Court, 2022)
Facts:
The petitioner’s account was hacked, and crypto was transferred out without consent.
The exchange argued that terms and conditions protected it from liability.
Judgment:
The Court held that even if terms exist, exchanges cannot disclaim all responsibility, especially if negligence is involved in safeguarding wallets.
The Court recognized that crypto wallets are intangible property, and unauthorized transfers can constitute misappropriation.
Significance:
Clarifies that wallet theft can be actionable under civil law.
Establishes precedent that terms of service cannot override fundamental property rights.
4. Rhino v. Zebpay (Bombay High Court, 2020)
Facts:
A hacker stole Bitcoin from the petitioner’s wallet on Zebpay.
The petitioner sought return of funds and damages.
Judgment:
The Court distinguished between crypto held in self-custody wallets versus exchange wallets.
For exchange wallets, the exchange has a duty to secure assets; failure can amount to negligence.
Users can claim restitution even if the loss occurs due to a cyberattack.
Significance:
First case emphasizing exchange liability for wallet theft.
Highlights difference in remedies depending on custody type.
5. Amit v. Local Police / Cyber Cell (Delhi District Court, 2021)
Facts:
Petitioner reported theft of cryptocurrency from his personal wallet.
Police initially refused to register the case, citing ambiguity in law regarding crypto theft.
Judgment:
Court instructed police to register FIR under Section 379 (Theft) and Section 66C of IT Act (identity theft / fraud).
Recognized that cryptocurrency is valuable property, and theft is prosecutable under existing criminal laws.
Significance:
Shows that criminal law can apply to wallet theft.
Provides guidance on filing complaints and legal recourse for stolen crypto.
✅ Summary of Legal Principles from these Cases
| Principle | Explanation |
|---|---|
| Crypto is property | Recognized by multiple High Courts (Madras, Delhi, Bombay). |
| Exchanges as custodians | Exchanges owe fiduciary duty; cannot arbitrarily freeze or misappropriate funds. |
| Civil remedies | Injunctions, proprietary claims, guarantees, escrow can be used to protect holdings. |
| Criminal liability | Theft and cyber-fraud laws (IPC, IT Act) can apply to stolen crypto. |
| User custody matters | Remedies differ if crypto is in self-custody wallet vs exchange wallet. |
🔹 Key Takeaway
While there is no Supreme Court ruling on wallet theft yet, High Courts in India have gradually created a legal framework:
Recognizing crypto as property.
Imposing fiduciary responsibility on exchanges.
Allowing civil and criminal claims for stolen crypto.
If a case reaches the Supreme Court, it is likely to solidify these principles and create a uniform standard for crypto wallet theft.
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