Major ED Action Against Gaming Platform WinZO
In a significant crackdown on online gaming and betting companies, the Enforcement Directorate has arrested WinZO founders Saumya Singh Rathore and Paavan Nanda. The arrests took place late on Wednesday, following which the founders were produced before a special court in Bengaluru that remanded them to 10 days of ED custody.
Massive Assets Frozen in Investigation
The federal investigation agency has frozen assets worth Rs 500 crore belonging to the company. The frozen assets include bonds, mutual funds, and fixed deposits. According to ED sources, WinZO was operating from India despite a comprehensive ban on all online money gaming and gambling activities in the country.
During the hearing on the remand application on Thursday, the ED counsel informed the court that the accused persons had used algorithms to deceive players in various online games. Players were unaware they were competing against algorithms designed to ensure their defeat, leading to significant financial losses.
International Money Laundering Uncovered
The investigation revealed that WinZO was systematically siphoning off proceeds of crime to the United States and was in the process of shifting its base to a country where online gaming faces no restrictions. The company had operations in Brazil, Germany, and the United States, in addition to its Indian operations.
ED sources disclosed that the directors had systematically diluted their shareholding in the Indian company, transferring these funds to their US-based subsidiary. The total available balance in the company's foreign accounts stands at approximately $55 million (Rs 490 crore).
Prima facie investigations established that proceeds of crime amounting to Rs 177 crore were generated between May 2024 and August 2024. These illicit gains were subsequently laundered to the US and Singapore through subsidiaries of WinZo Games based in the United States.
The agency also discovered Rs 43 crore in WinZo's escrow account, classified as payable to users. Sources indicated that the substantial pending payable amount suggests user wallets were blocked arbitrarily, preventing legitimate users from accessing or withdrawing their own funds.
The ED action follows four FIRs registered against the accused persons in Delhi, Bengaluru, Rajasthan, and Gurgaon. The agency conducted searches at premises linked to the accused, including WinZo Games offices in Delhi and the residence of Saumya Singh, between November 18 and November 22.
