The National Consumer Disputes Redressal Commission (NCDRC) has recently denied taking up the case of investors who are facing losses due to the $234 million crypto hack on WazirX. The NCDRC cited the lack of legal framework regulating cryptocurrency transactions in India as the reason for refusing to investigate the case.
Cryptocurrencies are not considered legal tender in India and are not officially recognized as investment assets. Therefore, the NCDRC stated that they do not have the jurisdiction to pursue legal action against WazirX.
Despite the obstacles faced by the investors, there is some positive news regarding the legal status of cryptocurrencies in India. Cryptocurrencies are classified as ‘goods’ under the Consumer Protection Act and are also recognized as assets under the Income Tax Act. This provides some legal standing for investors seeking redress for their losses.
It is reported that 40 investors have filed a lawsuit claiming losses amounting to around INR 12 crore (approximately $1.4 billion) in cryptocurrency. The government of India imposes a 30% tax on crypto earnings and requires all exchanges to register with the Financial Intelligence Unit (FIU).
Although a Digital Currency Bill was prepared in 2021 for cryptocurrency regulation, it has not been enacted, leaving the crypto space without clear rules and regulations. The Supreme Court’s decision on the matter is pending, after the court lifted the RBI’s ban on crypto trading in 2020.
WazirX founder Nischal Shetty has announced plans for a legal restructuring to help investors recover a significant portion of the lost funds by April. The company has pledged to return 85% of the lost holdings to investors through a Singapore Court-approved reorganization plan.
The reorganization plan involves distributing $284 million in liquid assets to investors in the form of recovery tokens. Users will be able to claim their funds by April after the reorganization process is completed. The strategy has been approved by the Singapore Court and is aimed at assisting investors in recovering their crypto assets.
It is important to note that the information provided in this article is for informational purposes only and should not be construed as financial advice. Viewers are advised to consult with their financial advisors before making any investment decisions.
