New Delhi, January 15, 2025: In a landmark development, the Hon’ble Delhi High Court heard arguments on a plea filed by Advocate Navodaya Singh Rajpurohit on behalf of petitioners Sudhir Verma and Kunal Dhariwal, seeking the constitution of a Special Investigation Team (SIT) to probe the massive cyberattack on cryptocurrency platform WazirX, which resulted in the loss of ₹2,000 crores and froze assets worth ₹4,700 crores.

The petition alleges grave statutory violations, including non-compliance with the Information Technology Act, 2000, Bharatiya Nyaya Sanhita, 2023, Companies Act, 2013, and anti-money laundering laws under PMLA and FEMA. The petitioners emphasized that WazirX’s reliance on inadequate security practices, failure to indemnify users, and its Singapore restructuring to transfer assets to Zettai Pte. Ltd. without user consent highlights a regulatory void that has left Indian users vulnerable.

The Hon’ble Court observed, “The petitioners cannot be left to bear the brunt of the said attack and that the operators of the WazirX platform must indemnify the petitioners.” Furthermore, it directed the Union of India, Reserve Bank of India (RBI), and Securities and Exchange Board of India (SEBI) to submit detailed replies on the regulatory oversight for platforms like WazirX and clarify any actions taken or proposed.

The Court also noted the petitioners’ arguments that the ongoing restructuring of WazirX in Singapore is a deliberate attempt to evade Indian legal obligations. By transferring user assets to Zettai Pte. Ltd., a Singapore-based entity, without user consent, WazirX seeks to classify Indian users as “contingent unsecured creditors.” This manoeuvre effectively denies Indian users their rightful legal recourse and protection under Indian jurisdiction.

Advocates Sarthak Guru, Rithik Dhariwal, and Dhawesh Phauja appeared alongside Advocate Rajpurohit for the petitioners. They argued that the platform delayed halting trading after the hack, exacerbating user losses, and misled users with claims of robust security. The petitioners submitted, “India’s absence of a comprehensive regulatory framework for Virtual Digital Assets (VDAs) has enabled platforms like WazirX to operate with impunity, leaving users without adequate safeguards or legal recourse.”

This case, which highlights systemic regulatory gaps, offers a beacon of hope for affected users and may shape India’s approach to cryptocurrency regulation. The matter is listed for the next hearing on May 15, 2025.