NCDRC Rejects WazirX Investor Claims, Citing India's Lack of Crypto Regulation

Investors plan to appeal to the Supreme Court, despite the NCDRC acknowledging crypto as "goods" and "property" for tax purposes.

A group of WazirX investors has faced a setback in their attempt to sue the exchange over a $234 million crypto hack.

The National Consumer Disputes Redressal Commission (NCDRC) will not be hearing the case due to India’s lack of clear crypto regulations.

However, investors plan to appeal to the Supreme Court, converging on the scene as WazirX continues its own endeavors to compensate users.

Despite this setback, the investors’ lawyer, Aman Rehaan Khan, has announced plans to approach the Supreme Court.

He intends to seek the recovery of lost funds and criminal action against those responsible for the hack.

While the NCDRC’s decision was disappointing, Khan highlighted that there was some progress.

The consumer forum acknowledged that cryptocurrencies qualify as “goods” under the Consumer Protection Act and are also treated as property under the Income Tax Act.

The case was initially filed by 40 investors who claim to have lost around INR 12 crore (approximately $1.4 million).

Legal Grey Area Around Crypto in India

Although cryptocurrencies are not legal tender in India, the government still imposes a 30% tax on crypto profits.

Crypto exchanges operating in the country must also register with the Financial Intelligence Unit (FIU) under the Finance Ministry.

However, regulation remains unclear. The Cryptocurrency and Regulation of Official Digital Currency Bill, 2021, was planned but never introduced, leaving the crypto industry without clear legal protections.

The Supreme Court’s decision is now highly anticipated, as it had previously lifted the RBI’s 2018 ban on crypto trading and criticized the government for failing to establish proper rules for crypto transactions and fraud investigations.

The apex court's verdict in this case could have a significant impact on the future of crypto in India.

WazirX Plans to Pay Back Investors

On a related note, after a Singapore court approved a restructuring plan for WazirX to help investors recover some of their lost funds, the company is forging ahead with the initiative.

WazirX, helmed by CEO Nischal Shetty, has committed to returning 85% of the stolen assets to affected users.

So far, the company has held eight online town halls with customers to provide updates on the recovery efforts. Further details are still emerging.

The plan involves liquidating $284 million in assets and distributing recovery tokens to investors. Once the company balances its financial liabilities, these tokens will be given to creditors.

WazirX also plans to relaunch its platform with a new decentralized exchange that will include improved security features.

Profits from the first three years after relaunch will be used to buy back recovery tokens, offering further relief to affected investors.

The restructuring plan has already been approved by the Singapore court, and WazirX has completed the rebalancing process.

Now, users will be able to start claiming their stolen crypto by April.

The Coming Months Will Be Crucial

With WazirX working on compensation and the Supreme Court set to hear the case, the coming months will be crucial for crypto investors in India.

The outcome could have a major impact on the future of crypto regulation in the country.

The crypto world in India continues to be a high-stakes game of risk and reward, but for WazirX investors, the real question is – will they finally see their lost funds again?