WinZO case: ED flags 298 user complaints, five FIRs and founder’s non-cooperation before Karnataka HC

The Karnataka High Court on Thursday heard a writ petition filed by online gaming platform WinZO Pvt Ltd challenging the Enforcement Directorate’s (ED) multi-day search operations conducted between November 18 and 22 at the company’s Eldeco Centre office in Delhi, as part of a money-laundering probe.

WinZO has questioned the legality of the searches carried out under an Enforcement Case Information Report (ECIR/BGZO/25/2025), arguing that the action was “illegal, void and without statutory justification” as it allegedly lacked the mandatory “reasons to believe” required under Section 17 of the Prevention of Money Laundering Act (PMLA). The company has sought a declaration that the five-day search and the panchanama drawn on November 22 were unlawful, along with expunging certain portions of the panchanama and quashing the ED’s freezing orders issued on November 21.

The freezing orders immobilised WinZO’s bank accounts, escrow accounts and other financial instruments. The company has also requested a stay on all ED actions stemming from the impugned raids until the court finally adjudicates the matter.

The matter was argued at length before a bench of Justice Suraj Govindaraj. Appearing for the ED, senior standing counsel Madhu N. Rao submitted that the investigation was founded on multiple predicate offences. He told the court that five FIRs have already been registered against WinZO and that, in addition, the agency has received 298 complaints from users alleging cheating by the platform. While these complaints have not yet been converted into FIRs, Rao said they would be shared with law enforcement agencies for appropriate action under Section 66(2) of the PMLA.

Detailing the agency’s allegations, Rao said the ED’s analysis revealed fraudulent practices, including the use of an internal algorithm referred to as “PPP” (Past Performance of Player). According to the ED, this algorithm was used to pit real human users against automated bots to influence match outcomes, without disclosing to users that they were competing against non-human players. The agency claims such practices generated illicit gains of about ₹177 crore between May 2024 and August 2025.

The ED has also alleged that WinZO misled customers by representing that its real-money games were free from bots or automated rival systems. Additional allegations include algorithmic auto-matching of players without user consent, arbitrary blocking of user wallets, and creating an ecosystem that restricted withdrawals by allowing only winnings—subject to daily caps—to be cashed out. The agency further claimed that the company continued to hold around ₹43 crore of gamer funds even after the Union government’s ban on real-money gaming came into effect on August 22, 2025.

Rao also pointed to alleged cross-border dimensions of the business, submitting that WinZO had foreign subsidiaries to which funds were diverted and that online games were operated in overseas markets such as Brazil and the US using common infrastructure, with control remaining in India. He further suggested possible transfer of intellectual property and databases to foreign entities, indicating an intent to shift operations abroad.

A significant part of Thursday’s hearing centred on the ED’s allegation of non-cooperation during the searches. Rao told the court that Saumya Singh Rathore, one of WinZO’s founders who was later arrested, did not cooperate with investigators during the raid.

Rao stated, "The accused Saumya Singh Rathore moved around the officer frequently and obstructed ED officials from conducting investigations. She also spoke to multiple employees who were being questioned."

According to the ED, Rathore continued to interact with employees whose statements were being recorded and kept moving around the premises at short intervals even while her own statement was being taken. Rao added that the agency was willing to place CCTV footage before the special court if WinZO filed an application, a statement that was accepted by the petitioner.

WinZO’s founders Saumya Singh Rathore and Paavan Nanda are currently in judicial custody, and their bail pleas are scheduled to be heard by the PMLA court on Friday.

Appearing for WinZO, senior counsel Sandeep Chowta argued that the ED’s actions had brought the company’s operations to a complete standstill. He told the court that even ancillary businesses such as content creation and micro-dramas had been affected, with salaries and vendor payments remaining unpaid. Chowta contended that the ED could not freeze the entirety of the company’s funds, as proceeds of crime under the predicate offences amounted to only about ₹10 lakh.

ED also stated that they have not frozen two bank accounts of the companys which consists more than ₹40 crore for salaries of employees.

He proposed that WinZO was willing to furnish bank guarantees totalling ₹220 crore—covering the alleged ₹177 crore in gains and ₹43 crore of unused customer funds—if the ED agreed to unfreeze the entire ₹505 crore currently under attachment.

The court adjourned the matter to Friday, December 19, to allow the ED to take instructions on whether it would accept bank guarantees in lieu of continued freezing, and to enable WinZO to place on record details relating to salaries, dues, turnover and costs of its various entities.