WinZO Founders Held in ED Money-Laundering Probe; ₹505 Crore Assets Frozen

ED Arrests WinZO Founders in High-Profile PMLA Case

The Enforcement Directorate (ED) has arrested Saumya Singh Rathore and Paavan Nanda, co-founders of online gaming platform WinZO Games Pvt Ltd, in a money-laundering investigation that has sent shockwaves through India’s real-money gaming industry.

The two were taken into custody in Bengaluru after rounds of questioning at the ED’s zonal office and were produced before a local court, which remanded them to agency custody for further interrogation under the Prevention of Money Laundering Act (PMLA).

The arrests come days after the agency carried out multi-city searches and froze what it describes as “proceeds of crime” linked to WinZO, escalating an ongoing crackdown on gaming platforms accused of cheating users and misusing customer funds.

₹505 Crore in Assets Frozen, ₹43 Crore Gamers’ Funds Flagged

According to ED’s findings, approximately ₹505 crore connected to WinZO has been frozen in the form of bank balances, fixed deposits, bonds and mutual funds. These amounts are alleged to represent proceeds of crime generated through unfair and fraudulent gaming practices.

In addition, the agency has highlighted around ₹43 crore belonging to gamers that remains parked on the platform and has allegedly not been refunded, despite the company having halted its Indian real-money operations following a government ban on online money games earlier this year.

The funds, ED claims, should have been returned to users within a stipulated window after the ban, but instead remained under the platform’s control — becoming a key focus of the money-laundering probe.

From Skill Gaming to Enforcement Target: What WinZO Is

WinZO, founded in 2016 and headquartered in New Delhi, grew rapidly as a mobile-first real-money gaming platform, hosting a mix of skill and casual games in multiple Indian languages and attracting backing from prominent venture investors.

The company positioned itself as a vernacular gaming ecosystem for Tier-2 and Tier-3 India, sharing revenues with third-party game developers and offering cash contests across genres like card games, arcade titles and fantasy formats. The platform reported strong revenue growth in recent years, even as policy makers tightened scrutiny on online money games and tax norms.

However, after the government introduced a stringent regulatory framework and a blanket ban on real-money gaming, WinZO announced that it was suspending its money games for Indian users while continuing to expand internationally.

Allegations: Algorithmic Play, Restricted Withdrawals and Foreign Diversion

ED’s probe has painted a very different picture of how the platform was operating behind the scenes. Based on search operations and examination of digital records, the agency alleges that:

• Users were often matched against software algorithms and bots instead of real human opponents in certain games, without clear disclosure, allowing the platform to tilt odds in its favour.
• Many customers who attempted to withdraw wallet balances allegedly faced delays, limitations or outright blocking of withdrawals, even before the official ban.
• Customer complaints cited cheating, rigged outcomes, misuse of KYC and PAN details, and accounts being frozen without proper explanation.
• A significant portion of revenues and gamer deposits were purportedly routed to overseas entities, including a US-based company described by ED as effectively controlled from India, raising questions about round-tripping and fund diversion.

Investigators say these patterns together indicate that the platform may have used its control over algorithms, wallet systems and cross-border flows to generate profits at the expense of unsuspecting users.

Real-Money Gaming Ban and the Compliance Vacuum

The crackdown on WinZO is unfolding against the backdrop of India’s new regulatory regime for online gaming, including a national law that bans real-money games where users deposit funds with the expectation of monetary winnings.

While authorities provided a transitional period for platforms to exit or reconfigure, enforcement agencies now allege that some operators continued to run or monetise real-money products — either by exploiting loopholes or by shifting traffic to international versions of the same platform.

In WinZO’s case, ED has pointed to continued operations targeting users in markets like the US, Brazil and Germany via a common technology stack, with core decision-making and bank-account control allegedly still anchored in India.

WinZO’s Response: ‘We Are Compliant and Cooperating’

In a statement following the asset freeze and raids, WinZO has said that it is cooperating fully with the ongoing investigation and maintains that it operates within the ambit of applicable law.

The company has emphasised that fairness and transparency are central to how it designs and runs the platform, and that its focus remains on user protection. It has also indicated that it will use legal remedies available to challenge any findings it believes are incorrect or incomplete.

The courts are yet to examine the ED’s evidence in detail, and no final determination of guilt has been made at this stage. The case nevertheless represents one of the most high-profile confrontations yet between India’s enforcement apparatus and a large gaming startup.

What This Means for Online Gaming, Fintech and Investors

The WinZO probe will likely ripple far beyond a single platform. For the broader real-money gaming and fintech ecosystem, it underscores how rapidly regulatory mood can shift from tolerance to enforcement — especially when user-protection, AML and cross-border movement of funds are involved.

Key implications include:

• Platforms will face greater pressure to segregate user funds from operating capital and maintain clear audit trails of deposits, payouts and promotional credits.
• Investors backing gaming and high-risk digital businesses will need to factor in the possibility of asset freezes, ED action and retrospective scrutiny when assessing valuations and exit timelines.
• Founders and boards will be pushed to strengthen compliance, AML checks and grievance redressal, moving away from “growth at any cost” models.

The case also raises difficult questions about how to regulate algorithm-driven platforms that blur the line between entertainment, finance and wagering.

Shunyatax Global Insight: Governance and Controls in High-Risk Digital Sectors

At Shunyatax Global, we see the WinZO episode as a clear reminder that businesses operating at the intersection of money, technology and gaming cannot treat compliance as an afterthought. Once enforcement begins, the combination of PMLA powers, asset freezes and reputational damage can be devastating.

For online platforms, fintechs and gaming companies, robust frameworks are essential around:

• Segregation and safeguarding of customer funds,
• Transparent game mechanics and algorithm audits,
• AML and KYC controls that go beyond minimum check-box compliance,
• Documented user-consent flows and grievance-resolution mechanisms,
• Clear policies for cross-border fund flows and overseas subsidiaries.

To explore how Shunyatax Global can help you design stronger controls, prepare for regulatory scrutiny and reduce enforcement risk in digital and gaming businesses, visit Shunyatax Global Services.