Delhi High Court Issues Notices To ED And FIU On WazirX $230 Million Hack

The Delhi High Court issued notices to the Enforcement Directorate and Financial Intelligence Unit regarding a hacking incident at WazirX. The court allowed affected WazirX users to pursue civil claims to recover their funds, emphasizing the need for regulatory scrutiny.

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Meghna Chowdhury
Meghna Chowdhury
Meghna is a Journalism graduate with specialisation in Print Journalism. She is currently pursuing a Master's Degree in journalism and mass communication. With over 3.5 years of experience in the Web3 and cryptocurrency space, she is working as a Senior Crypto Journalist for UnoCrypto. She is dedicated to delivering quality journalism and informative insights in her field. Apart from business and finance articles, horror is her favourite genre.

On October 18, the Delhi High Court addressed a petition from investor Jaivir Bains, seeking action against WazirX following a hacking incident that resulted in the loss of more than $200 million from the company’s multi-signatory wallet server. The matter was presided over by Justice Sanjeev Narula.

Bains’ petition, filed through Advocate Ankit Bhatia, claimed that WazirX was hacked in July 2024, leading to substantial financial losses for Indian investors.

Following the hack, WazirX decided to merge affected and unaffected funds to compensate for the losses, a move aimed at ensuring no investor suffered financially due to the incident. This approach, however, has raised concerns about regulatory compliance and the ethical handling of customer funds.

Delhi High Court Issues Notices to ED and FIU

The Enforcement Directorate (ED) and the Financial Intelligence Unit (FIU) were among the prominent financial investigative authorities that received warnings from the Delhi High Court three months after the attack, which prevented almost 4.4 million customers from accessing their cryptocurrency and Indian rupee accounts. In light of the hacking event, the court is trying to decide whether an inquiry into WazirX’s administration is necessary.

The Delhi High Court has reportedly permitted the petitioner and other impacted WazirX users to file a lawsuit in an Indian civil court to seek the recovery of their embezzled money. This decision was made after WazirX suspended all transactions in the wake of the cyberattack, greatly infuriating its user base.

While the court recognized that cryptocurrencies operate in an unregulated environment in India, it nonetheless expressed the importance of investigating the circumstances surrounding the hack. It issued notices to the FIU and ED to explain whether an investigation could be launched regarding the incident.

WazirX Parent Company in Spotlight

Bains has asked the court to look into Zanmai Labs, one of WazirX’s parent companies that Nischal Shetty co-founded. Bains drew attention to the possible legal infractions that could arise from WazirX’s equalisation strategy, which combines assets that have been hacked and unhacked.

The Delhi High Court advised the petitioner to study the user agreement governing withdrawals, noting that it seems that this is a civil matter. The court made it clear that regulatory bodies might only intervene if proof of any regulatory infractions was presented.

The Delhi High Court’s actions reflect a growing scrutiny of cryptocurrency exchanges in India, particularly regarding their operational practices and the handling of funds in the wake of security breaches. The outcomes of these proceedings may set a significant precedent for how similar cases are treated in the future.

WazirX Takes Major Step Toward Transparency By Revealing 240,000 Wallet Details

WazirX Granted Four-Month Moratorium By Singapore Courts

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