WazirX Users Sue Exchange Over Frozen Funds Alleging Misclassification

WazirX users have initiated legal action against the cryptocurrency exchange for freezing their crypto and fiat balances without providing a clear explanation. According to a court affidavit, the users' funds were allegedly misclassified, leading to a violation of their rights. This development underscores the growing concerns among cryptocurrency users regarding the transparency and accountability of exchanges.

At the center of this fight is how Zettai, WazirX’s Singapore entity, grouped all user assets. According to Romy Johnson’s 40-page affidavit, these are: unhacked coins (Category A), fiat-like INR (Category B), and the hacked ETH/ERC-20 tokens (Category C). However, under Singapore’s law, only real debts can be restructured, not user-owned assets held in trust. Users say Zettai crossed the line by using everyone’s coins to push a plan that doesn’t protect innocent holders.

Things get more confusing because the so-called hack might not even be real. Blockchain records show something odd: the stolen coins were moved using internal multisig wallets that needed multiple approvals. No clear sign of an outside attack has been shown so far. Therefore, this kills Zettai’s excuse that it was an outside hack. Meanwhile, users are now calling out Zettai for hiding key details. They want the names of people who approved these transfers. They also want an audit to check where all the coins went and who should be held responsible.

Singapore’s High Court already rejected Zettai’s first scheme because it hid links to an offshore shell company. Now, Romy Johnson’s affidavit shows this is not just about one exchange. He cites major court cases proving that crypto held in trust belongs to the users, even during bankruptcy. However, the next hearing in WazirX’s ongoing case has now been rescheduled for July 15, 2025.

At the heart of it, this is about protecting user funds. Meanwhile, Zettai claims it will repay users once the new plan is approved. But trust is low. Angry users point out that promises don’t pay bills. The legal action taken by WazirX users is a significant step towards holding exchanges accountable for their actions. It sends a clear message that users will not tolerate the arbitrary freezing of their funds and that exchanges must be transparent in their operations. This development could set a precedent for future cases, encouraging other users to take legal action against exchanges that fail to uphold their responsibilities.

The broader implications of this legal action extend beyond WazirX. It underscores the need for exchanges to implement robust internal controls and compliance mechanisms to prevent such incidents from occurring. Exchanges must prioritize the protection of user funds and ensure that they are managed in a transparent and accountable manner. This includes providing clear explanations for any actions taken regarding user funds and ensuring that users have access to appropriate channels for redress.

In conclusion, the legal action taken by WazirX users against the exchange for freezing their crypto and fiat balances highlights the urgent need for stronger regulatory oversight and transparency in the cryptocurrency industry. This incident serves as a wake-up call for exchanges to prioritize the protection of user funds and for regulators to establish clear guidelines to safeguard users' interests. As the cryptocurrency ecosystem continues to evolve, it is crucial that all stakeholders work together to create a more secure and trustworthy environment for users.