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Can you Legally Challenge Indian Crypto Exchanges? Here’s what their terms say

While the Government as well as banks in India grapple with regulations for the phenomenon we call cryptocurrency, the nation is seeing a tremendous growth in terms of investors and traders in the space.

The local exchanges such as WazirX, CoinDCX, Unocoin and others, catering to Indian traders and investors have witnessed multifold increase in registrations. Today the crypto space in India is unregulated and there is no watchdog to oversee the crypto market participation. In
such a scenario any legal dispute between the trader and the exchange would have to be settled
through the courts.

Most exchanges in their terms and conditions of use, binding on the customer, have provided for
dispute resolution mechanism. While some have arbitration clauses and others confer exclusive
jurisdiction for initiation of litigation. Whenever a user signup/registers with an exchange, the user
accepts these terms of service which usually specify the dispute resolution mechanism that shall be
followed in case of a dispute with the exchange. This article reviews the dispute resolution
mechanism provided by some popular Indian cryptocurrency exchanges.

WazirX Dispute Resolution

The terms of service of this exchange are known as User Agreement Version 1.02 which was last
updated on May 21, 2020. The User Agreement sets out legally binding terms and conditions for the
usage of the WazirX platform which is owned by the parent company Zanmai Labs Private Limited.

Clause 13 of the terms of service provide for the dispute resolution. In terms of the clause
any dispute arising between the user and Zanmai in regards the exchange shall be settled through an
arbitration. The seat of arbitration shall be Singapore and the arbitration shall be governed by the
arbitration rules of Singapore International Arbitration Centre.

What this means is that if a user/trader wishes to use his legal remedy to settle a dispute with
WazirX, the user/trader will have to initiate arbitration in Singapore. Also, user/traders remedy
before the courts in India is ousted by the acceptance of the above-mentioned User Agreement at
the time of sign-up.

CoinDCX Dispute Resolution

Similarly, CoinDCX also has an arbitration clause wherein the seat of arbitration shall be Singapore
and the arbitration shall be governed by the arbitration rules of Singapore International Arbitration
Centre. Clause number 8 of the terms and conditions of use dated November 2020 provides for the
dispute resolution clause.

Coinswitch Kuber Dispute Resolution

With a short and easy to understand terms of use, Coinswitch has an exclusive jurisdiction clause,
whereby the user/trader agrees to submit to the exclusive jurisdiction of the courts in Bangalore,
India. Unlike the above mentioned exchanges, the jurisdiction to settle any disputes remains within
the territory of India, particularly Bangalore and there is no arbitration clause either thus leaving the
user/trader the right to enforce its legal remedy in the courts with competent jurisdiction.

Unocoin Dispute Resolution

With a similar dispute resolution mechanism to Coinswitch Kuber, Unocoin additionally also gives the option for a user/trader to enter into an arbitration to settle the disputes. The jurisdiction like Kuber is Bangalore.

Bitbns Dispute Resolution

With the Terms and conditions last updated on July 26, 2019, Bitbns provides for a vague dispute
resolution clause. It appears from a bare perusal of the dispute resolution clause that it tries to bind
the user to the exclusive jurisdiction of the state of Karnataka, whereas the same has been worded
poorly. So the user/trader has the right to enforce his legal rights against the exchange in any court
with competent jurisdiction.

While the exchanges like, WazirX and CoinDCX, with prime focus on Indian markets bind the
user/trader with an international arbitration clause, thus making it not just difficult but also
expensive for an average joe user/trader to enforce its legal remedies against them, other Indian
exchanges have made it easier for the user/trader to knock on the doors of competent court for
resolution of their disputes.

An increase in the trading activities in a population that has the sheer potential to be the biggest
crypto trading country, the government should show some alacrity in regularizing trading.
Appointing a nodal authority to regulate the exchanges will also make dispute resolution easily
accessible to all existing and protentional participants to the crypto market.

About the Author:

Pushkar Taimni is a lawyer and head of Taimni and Co and a crypto enthusiast himself. He can be contacted at [email protected] / [email protected].

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