Consumer court dismisses WazirX hack victims’ complaints

A consumer court has dismissed the complaints of a group of investors that were affected by the WazirX hack. According to a report, the National Consumer Disputes Redressal Commission (NCDRC) declined to entertain the plea of the investors who lost $234 million after the crypto exchange was hacked.

According to reports, the commission told the complainants that the legality and the nature of the transactions are still not regulated to the extent as required in the country and therefore carrying out an investigation into the illegalities in their complaints “does not seem to be amenable to this jurisdiction”.

In light of the response, the advocate representing the complainants, Aman Rehaan Khan, told reporters that the complainants will move their complaints to the Supreme Court. “We plan to take this matter to the Supreme Court and seek recovery of lost funds and criminal proceedings against the entities and individuals involved in the matter,” Khan said.

Consumer court dismisses WazirX victims’ complaints, Supreme Court next?

According to the lawyer, the verdict of the NCDRC was disappointing but mentioned that their morale is not dampened. He mentioned that while the setback was something worth pondering about, there were some positives from the consumer forum’s verdict. He mentioned that the forum agreed that cryptocurrencies are classified as goods under the Consumer Protection Act and also fall under the purvey of property mentioned in the Income Tax Act.

The complaint, which was jointly filed by about 40 investors, claimed that they had lost about 12 crores ($1.4 million) worth of digital assets in the hack and eventual theft that took place on WazirX. While crypto is not regarded as legal tender in India, the government charges a 30% tax on profits made from trading digital assets. Also, the country mandates all the crypto exchanges operating within its shores to be registered with the Financial Intelligence Unit (FIU), a division of the finance ministry.

The government mentioned in 2021 that it planned to discuss the Cryptocurrency and Regulation of Official Digital Currency Bill in Parliament, but the government ended up not advancing the bill. The bill has been relegated to the side since then, and the crypto industry has remained largely unregulated since that time.

Now it remains to be seen what the Supreme Court verdict will be, with the SC lifting the ban on crypto trading in 2020 after the Reserve Bank of India (RBI) placed a ban on the activities in 2018.

WazirX reveals plan to pay back customers

The Supreme Court has also been involved in other cases in the crypto scene, with the court chiding the center for failing to define clear rules that will guide crypto trading in India and for not defining the agency that will be in charge of investigating cases related to forgery of crypto. While all those are in the past, the investors will be looking to the SC as the last hope to issue their complaint and grant them a favorable verdict.

Meanwhile, the Nischal Shetty-led WazirX crypto exchange has mentioned that it has drummed up plans to restructure things and help its users recoup some of the funds that they lost during the hack. Under the restructuring scheme, the platform intends to issue liquid assets worth $284 million, adding recovery tokens to its affected users. After it is done rebalancing liabilities, the rebalanced liquid assets would be distributed in tokens to some creditors.

The plan also includes reactivating the WazirX platform, with the exchange planning to launch a decentralized exchange with new capabilities. The profits it generates in the first three years of its reactivation would be used to fund the recovery token purchases.

The exchange got approval from a Singaporean court to initiate the restructuring scheme two months ago. Last month, it completed the rebalancing of its liquid asset in line with the plan. If the plans goes through as expected, users would be able to claim their stolen assets by April.

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