Supreme Court Rulings On Cryptocurrency Wallet Hacking
Supreme Court of India cases (or other apex court rulings) that deal specifically with cryptocurrency wallet hacking (i.e. theft of crypto from wallets, hacking, etc.) in full detail. What is available tends to involve related issues—wallet access credentials, scams involving crypto, and regulatory uncertainty. Below are some of the more relevant case-law developments and judicial orders that touch on crypto wallet hacking or mismanagement, along with detailed explanations. Because the domain is very new, some are writ petitions or orders rather than full judgments, but they are illustrative of how courts are approaching crypto wallet hacking issues.
Key Case Studies / Judicial Orders
1. GainBitcoin / Ajay Bhardwaj: Disclosure of Wallet Credentials
Facts:
Ajay Bhardwaj / GainBitcoin are accused in a large-scale crypto scam (multi‑level marketing / Ponzi‑type) involving Bitcoin, where investors were allegedly duped. LawBeat+2www.ndtv.com+2
Part of the investigation involves getting access to digital crypto wallets allegedly held by the accused. Specifically, ED (Enforcement Directorate) needs usernames & passwords, private keys, etc., to trace movement of funds / stolen crypto. www.ndtv.com+2Arunachal Times+2
Judicial Direction / Issue:
The Supreme Court directed the accused (Ajay Bhardwaj) to disclose the username and password of the Bitcoin wallet to ED. www.ndtv.com+2The Economic Times+2
This is in the context of bail, protection from arrest etc., but subject to cooperation. The Economic Times+1
Significance:
This is one of the few judicial orders directing disclosure of wallet access information. It signals that courts consider wallet credentials crucial for investigations of crypto fraud/hacks.
It raises important questions: privacy, rights of accused, extent of compulsion, whether private keys should be disclosed, whether that is akin to self‑incrimination.
Limitations / Observations:
The direction is in a case involving allegations of fraud / scam rather than purely “wallet hacking” in the sense of an external attacker breaking in.
The decision isn’t yet a full Supreme Court judgment laying down legal principles about crypto hacking, but it's moving in that direction.
2. Supreme Court on Bitcoin Scam FIRs: Transfer to CBI / Username / Password Order
Facts:
Over 40 FIRs related to a Bitcoin scam (GainBitcoin etc.) had been filed across various states. Supreme Court transferred all these FIRs to the CBI, and shifted trials to a court in Delhi. www.ndtv.com
As part of that, the Court observed that the accused had earlier been ordered to share credentials (username/password) of their Bitcoin wallets with the Enforcement Directorate. www.ndtv.com+1
Issue:
Whether FIRs involving substantial crypto fraud and possibly wallet hacking / unauthorized transfers merit centralized investigation, and how far courts can direct wallet access credentials.
Ruling:
The Supreme Court vacated earlier orders of anticipatory bail for some accused, emphasizing cooperation. www.ndtv.com
The centralization of FIRs suggests recognition that crypto‑wallet hacking & scams need investigative consolidation.
Significance:
Shows willingness of the Supreme Court to treat crypto wallet issues seriously.
Also that courts are ready to grant investigative agencies authority to demand access to wallet credentials.
3. WazirX Hack – Supreme Court Petition by Victims
Facts:
In July 2024, the WazirX crypto exchange purportedly suffered a hack, with losses estimated at ~ USD 234 million (or ~₹2,000 crore). Victims filed a writ petition in the Supreme Court alleging gross negligence, mismanagement of user assets etc. FinanceFeeds+1
Over 50 victims are respondents in the petition, naming management, Binance, Liminal Custody etc. FinanceFeeds
Issue:
Can the Supreme Court entertain a criminal writ petition in such a case of wallet hack, to hold exchange liable or direct relief to victims? What legal standard for negligence or security obligations?
Ruling / Current Status:
The petition has been registered, but the Court appears to have dismissed some of the claims (or is not inclined to entertain parts) citing regulatory uncertainty in cryptocurrency laws in India. Coin Edition+1
Significance:
This shows several points:
Victims are trying to use constitutional writs / Supreme Court to get redress against crypto wallet hacks / exchange negligence.
Courts are cautious if there is no clear regulatory framework – that regulatory gap is a hurdle.
The case could set precedents on how exchanges will be held responsible for failures in security, wallet management, smart contract vulnerabilities etc.
4. Sriki / Karnataka Bitcoin Scam – Alleged Hacking of Wallets & Access While in Custody
Facts:
“Sriki” (Srikrishna Ramesh) is an accused hacker arrested in Karnataka. The SIT (Special Investigation Team) alleges that while in custody, crypto wallet access credentials/cloud wallets belonging to him were accessed (or attempted), wallets transferred, cloud data erased etc. The Indian Express
The investigation found possible hardware crypto wallets, cloud wallets, transfer of Bitcoin, procurement of hardware wallets, deletion of access logs (“bash history”) etc. The Indian Express
Issue:
Did the cops / technical cell / cyber experts illegally access wallet credentials/cloud wallets etc? What is admissibility of digital evidence? What are rights of accused re: wallet private key and access credentials? What is chain of custody?
Judicial / Investigative Responses:
FIRs have been registered. Some arrests of police officers and cyber experts. There is forensic analysis of laptops / hardware wallets / cloud logs. The Indian Express
Courts (or SIT) are looking into whether the wallets and relevant logs have been preserved / tampered with.
Significance:
This is closer to a “wallet hacking” case, in that there is alleged unauthorized access to wallets, even while in custody.
Shows how courts are dealing with forensic evidence: hardware wallets, cloud storage, logs, public/private key issues.
Limitations:
As far as public reporting goes, a full Supreme Court judgment has not yet appeared that lays down standards in such cases.
What’s Missing / Legal Gaps
From the above, we can see that:
There are few Supreme Court judgments that have fully addressed wallet hacking per se (i.e. a case where the hack was external, theft of private keys or wallet by a third party) with detailed legal reasoning, standards, precedents etc.
Many orders are interim orders, directions to assist investigation, disclosure of credentials etc.
Regulatory clarity is lacking – courts repeatedly note that crypto regulation in India is uncertain, which complicates legal analysis.
Possible Legal Principles Emerging
From these cases and orders, some legal principles / judicial trends that can be gleaned:
Disclosure of Wallet Credentials
Courts are willing to direct accused to reveal usernames/passwords/private key information to investigating agencies, particularly when crypto‑wallets are central to proving misappropriation or tracing stolen assets. The GainBitcoin case is a prime example.
Investigative Cooperation is Key
Courts emphasize cooperation by accused with agencies like ED, and non‑compliance can lead to revocation of bail / anticipatory bail etc.
Forensic Evidence & Chain of Custody
In cases like Sriki’s, forensic analysis of laptops, cloud wallets, hardware wallets, logs, etc., are being used. Proper preservation / forensic imaging becomes important.
Exchange / Custodian Liability / Negligence
In the WazirX hack case, victims are alleging negligence by the exchange (poor security, mismanagement). Courts may develop legal doctrine on what standard of care exchanges owe to users.
Regulatory Uncertainty as a Barrier
When the legal status or regulatory framework for cryptocurrencies is unclear, courts are wary of issuing broad orders or defining legal obligations.
Conclusion
While there are orders and pending petitions in Supreme Court on cryptocurrency wallet hacking, theft, and mismanagement (GainBitcoin, Sriki, WazirX), as of now (based on accessible information), there isn’t a large set of final Supreme Court judgments expressly on external wallet hacking theft with fully reasoned principles. The existing orders and case studies show courts are beginning to grapple with:
Access and disclosure of wallet credentials / private keys
Duties of exchanges and custodians
Forensic standards and admissibility of digital evidence
Balancing victims’ rights vs rights of accused
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