WinZO co-founders Saumya Singh Rathore, Paavan Nanda arrested by ED in PMLA case

ED said its investigation found that WinZO was engaged in "criminal activities and unscrupulous practices"

The Enforcement Directorate (ED) has arrested real-money gaming platform WinZO co-founders  Saumya Singh Rathore and Paavan Nanda on money laundering charges.

Officials said the two were summoned to the ED's Bengaluru zonal office on November 26 and were taken into custody after questioning.

A local court later sent them to one-day custody. They are expected to be produced again before the court for detailed arguments, officials added.

The arrests come after the ED searched four WinZO locations in Delhi and Gurugram earlier this month and froze assets worth Rs 505 crore in the form of bank balances, bonds, fixed deposits, and mutual funds under Section 17 (1A) of the Prevention of Money Laundering Act (PMLA).

On November 24, ED said its investigation found that WinZO engaged in "criminal activities and unscrupulous practices i.e. customers were made to play with algorithms or software without being made aware of the fact that they are playing with software or algorithms and not with humans in real-money games".

The probe also revealed that WinZO prevented or limited withdrawals of monies held by the customers in their wallets, and that about Rs 43 crore is still being held by the company without being refunded to players, despite a ban on real money games since August 22, the agency said.

That said, the online gaming law is yet to come into effect and the draft rules, released on October 2, proposed a 180-day window for gaming companies to repay funds owed to users once the law gets operational.

The agency also said its investigation found WinZO operating real money games in markets such as Brazil, the United States and Germany from India using the same platform as its Indian entity.

About $55 million (Rs 489.90 crore) has been parked in a bank account in the United States held in the name of WinZO US Inc, which the ED described as a shell company, since all operations, day-to-day activities, and bank account management are handled from India.

Moneycontrol has reached out to WinZO for a comment. In a statement on November 24, WinZO said the company has been "cooperating fully with the investigating agency and will continue to support the process".

"Fairness and transparency are core to how WinZO designs and operates its platform. Our focus remains on protecting our users and ensuring a secure, trustworthy experience. WinZO remains fully compliant with all applicable laws," the statement added.

Apart from WinZO, ED also froze eight bank accounts, holding around Rs 18.75 crore, tied to Gameskraft and Nirdesa Networks (Pocket52) as part of its probe.

Gameskraft had paused the operations of Pocket52 in May, as part of a "broader plan to reassess and reimagine its long-term approach".