In a recent court ruling, the Bombay High Court addressed a disagreement involving Zanmai Labs, Bitcipher Labs, and Nextgendev Solutions. The case is about a cyber-attack on the WazirX trading platform, which affected digital assets and led to a legal fight over who was responsible and how assets should be kept safe.
On July 18, 2024, a major cyber-attack hit the WazirX Platform, compromising ERC-20 tokens. These tokens made up about 40.5% of Bitcipher's holdings on the platform. After the attack, Zanmai Labs limited user access, saying the security breach was an unavoidable event. This action led to the dispute, as Bitcipher and Nextgendev claimed their assets were unfairly frozen.
"The theft of ERC-20 assets is said to have had an impact of approximately USD ~235 million."
Zanmai Labs argued that Binance, a company involved in the User Agreement and previously responsible for the platform's security, was to blame for the cyber-attack. They said Binance's separation from WazirX in 2022 left Zanmai to manage the platform unwillingly. Zanmai suggested spreading the losses among all users.
Bitcipher argued that Zanmai, through their agreement, had promised to ensure security and uninterrupted service, making them responsible for the breach. They said Zanmai's attempt to blame Binance was invalid because the agreement made Zanmai the same as WazirX.
The court, led by Judge Somasekhar Sundaresan, looked at the agreements and found Zanmai's arguments weak. The court noted that the agreement required Zanmai to keep security measures in place, and the idea of spreading the losses was not supported by the contract.
"The Learned Arbitral Tribunal has adjusted for such component of virtual digital assets which were subjected to the cyber-attack and indeed provided an interim haircut on the value of such asset."
The court decided against Zanmai's requests, supporting the Tribunal's decision that Zanmai must protect the assets of Bitcipher and Nextgendev. The court stressed that Zanmai must regain control over the assets and ensure their safety.
The case points out the complexities of managing digital assets and the importance of having clear responsibilities in contracts, especially when facing cyber threats.
"All that Zanmai has to do is regain control over the assets of its users and provide assurance that they are secure."
The legal proceedings will continue with contempt petitions scheduled for November 11, 2025.
