The National Consumer Disputes Redressal Commission (NCDRC) has recently declined to take up the case of investors of WazirX who are facing losses due to a $234 million crypto hack. The commission stated that crypto transactions are not fully regulated in India, hence they cannot investigate the case. Moreover, Cryptocurrencies are not considered legal tender in India and are not officially recognized as investment assets, leading to the rejection of the lawsuit against WazirX.
In response to this decision, the stakeholders’ lawyer, Aman Rehaan Khan, has announced plans to appeal to the Supreme Court to seek justice for the affected investors. The lawyer emphasized that while the legal battle may be challenging, there are some positive aspects to consider. Cryptocurrencies are recognized as ‘goods’ under the Consumer Protection Act and are treated as assets under the Income Tax Act, providing a potential legal avenue for the investors to recover their lost funds.
Despite the lack of clear regulations governing cryptocurrency in India, the government imposes a 30% tax on crypto earnings and mandates all exchanges to register with the Financial Intelligence Unit (FIU). While a Digital Currency Bill was drafted in 2021 for cryptocurrency regulation, it has not been enacted, leaving the crypto space in a regulatory grey area.
The founder of WazirX, Nischal Shetty, has expressed his commitment to implementing a legal framework to help investors recover a significant portion of the funds lost in the hack by April. WazirX has proposed a reorganization plan approved by the Singapore Court, aiming to return 85% of the lost holdings to investors through a token distribution process. The company has conducted multiple town hall meetings with customers to address their concerns and outline the recovery process.
The reorganization plan involves distributing $284 million in liquid assets to creditors in the form of recovery tokens, allowing investors to claim their crypto funds by April. The strategy has been endorsed by the Singapore Court, and WazirX is actively working towards fulfilling its commitments to the investors.
In conclusion, while the legal battle continues for the investors of WazirX affected by the crypto hack, there are positive developments in the form of a structured recovery plan. It is essential for investors to stay informed and seek guidance from financial advisors before making any investment decisions in the volatile crypto market.