Bombay High Court Delivers Major Blow to WazirX, Upholds CoinSwitch in Hack Legal Battle

Indian crypto exchange WazirX just took a massive legal hit—while rival CoinSwitch scored a decisive courtroom victory.

The Judicial Hammer Drops

Bombay High Court justices sided entirely with CoinSwitch, rejecting WazirX's challenge over security protocols during that messy 2024 platform breach. The ruling establishes critical precedent for exchange liability in hack scenarios—and frankly makes you wonder why some platforms still treat security like an optional feature.

Regulatory Reckoning

This decision forces Indian exchanges to confront their infrastructure vulnerabilities head-on. No more hand-waving about 'industry-standard practices' when user funds vanish into digital oblivion. The court's message echoes what crypto veterans have whispered for years: either build fortress-level security or prepare for legal annihilation.

Market Fallout

While WazirX licks its wounds, the broader industry gets a stark reminder that regulators aren't playing games anymore. Another day, another exchange learning the hard way that blockchain's transparency works both ways—especially when lawyers come knocking.

WazirX loses appeal, CoinSwitch wins favorable verdict

The dispute began after hackers breached WazirX’s multi-signature wallets in July 2024, stealing ERC-20 tokens valued at $234 million. The hackers were said to have created a fake WazirX account, deposited tokens, and purchased Gala tokens.

After draining the hot wallet, they also accessed the cold wallets. When the signatories accessed the wallet, the hackers altered the smart contract control. After it was modified, they gained full control and drained all the funds.

According to reports, CoinSwitch maintained broker accounts of WazirX, losing a significant portion of its funds in the attack. After the breach, CoinSwitch and Nextgendev Solutions approached an arbitration panel seeking security for the stolen assets.

The tribunal overseeing the proceedings issued orders on December 24 and March 2025, instructing Zanami Labs, the operator of WazirX, to deposit bank guarantees of about Rs. 45.38 crore in favor of CoinSwitch.

However, Zanami Labs argued that the hack was beyond its control and blamed Binance for cybersecurity failures. Binance had previously managed WazirX’s infrastructure. The court ruled against the claim, rejecting it on the premise that the Broker Agreement between CoinSwitch and Zanami Labs carried clear operational obligations that could not be shifted to a third party.

Justice Sundaresan mentioned that “the arbitral tribunal interpreted the contract reasonably and acted within its mandate,” meaning that Zanami Labs’ challenge is without merit.

Next steps in the restructuring and rebuilding

The ruling also addressed the assertion made by Zanami, which mentioned that its Broker Agreement with CoinSwitch was only a tax-related arrangement. It rejected the claim and affirmed that the agreement had major legal implications regarding operational responsibilities.

As reported by Cryptopolitan, the crypto exchange has mentioned that it is complying with the order passed by the Singaporean court regarding the court-mandated deadline in the restructuring case that was attached to the cyber attack.

Before then, the company unveiled a $70 million recovery program for its users. According to the announcement made at the time, CoinSwitch was tasked with distributing the funds to WazirX users over two years.

Affected users will receive funds in INR or crypto without the option of lock-in, allowing flexibility in trades and withdrawals. The exchange said it plans to track claims once it reopens its crypto withdrawal system, noting that it was put in place to ensure fair distribution of funds based on user losses.

With all submissions now filed, the High Court is expected to fix a hearing date. The decision will affect the future of WazirX and its restructuring plans, which aim to balance creditor claims with the exchange’s ability to recover and rebuild.

In its recent update, the exchange claimed that 95.7% of its creditors and 94.6% of approved claims voted in favor of its amended restructuring proposals. The results were also confirmed independently by Alvarez & Marsal (SE Asia) Pte Ltd’s Joshua Taylor and Henry Anthony Chambers, who claimed that there is solid support for the adjusted plan.

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