Karnataka High Court Asks ED To Consider Bank Guarantee For De-Freezing Winzo's ₹505 Crore Account Amid Money Laundering Case

The Karnataka High Court on Thursday asked the Enforcement Directorate, which is probing an alleged money laundering case against online gaming company Winzo, if it will accept bank guarantees to de-freeze company's account worth ₹505 crores.Winzo has alleged that the account freezing is disproportionate given the amount of ₹10 lakh (approx) involved in the predicate offence alleged against it.For context, ED has alleged that Winzo made its customers compete with bots in real money games, without informing them that they were playing against software and not human players.Senior Advocate Sandesh J Chouta appearing for the company today argued that the three predicate offences, based on which ED registered an ECIR, involve only around ₹7-8 lakhs. Thus, freezing ₹505 crores is disproportionate.He further argued that the impugned orders do not mention the 'reasons to believe' about existence of proceeds of crime and thus the freezing is not proper as per the Prevention of Money Laundering Act.Justice Suraj Govindaraj however orally told the counsel,"This is not a regular case where you apply the regular working of the Act. How much total amount comes in and the payout made by you? And if you are using an algorithm, this is worse than a lottery. It shows that you are mapping and matching, so it is not real player vs real player, without informing the live user, and if the bot is used by you to win, then it is a big issue...Is this a matter where regular PMLA would apply? This is a case where the offence is in rem.”Chouta insisted that the proceedings against the company cannot go beyond the predicate offence.Following which, the Court directed ED to respond by tomorrow whether it would be willing to accept a bank guarantee offered by the company by way of security, to de-freeze its accounts.Meanwhile, since ED has alleged that the company was offloading alleged proceeds of crimes to its foreign subsidies, the Court has asked Winzo to place on record details of business carried out by it and its subsidiaries, associates, promoters etc. outside India, their turnover as also the income earned.Previously, the Court had sought details about the number of complaints received against Winzo and the amounts involved therein.Today, ED counsel Madhu N Rao submitted that each of the 4 FIRs allege different amounts and there are certain people who have filed complaints (298 in total). He further submitted that search proceedings at Winzo offices and residence of its directors has revealed that around ₹177 crore were earned by the company by deploying bots against users. “They maintain everything in the AWS data and when we started downloading the data, we found Rs 177 crore unethically having been gained by the company.”He also pointed out that the company had imposed restrictions on users from withdrawing their own money from the wallet— forcing them to play more.Further, Rao submitted that search operations revealed that Winzo formed foreign subsidiaries, interestingly being run from India only, and the total balance in the overseas accounts is around ₹499 crores, transferred from India in the form of cryptocurrency.On Tuesday, the Court had also asked ED if CCTV footage of the search proceedings can be made available to the company.Today, Rao submitted that if an application in this regard is preferred by the company under Section 21 PMLA, it would be considered and necessary documents would be provided. Winzo has also contended that de-freezing of its accounts is necessary to pay employees' salaries. ED however contended that two bank accounts, having a total of around ₹14.5 crore, are available with the company. It added, “They have sought salary for 200 people but that issue is pending before the PMLA court and for that the public money cannot be held ransom.”The agency also denied the allegation made by the company of its promoter being arrested after sunset and statements being recorded at late hours. ED counsel referred to the remand report where the PMLA court recorded that no complaints about ill health or against the ED officers were made by the accused and he had agreed to the time of arrest which was before 6 pm.The hearing will continue tomorrow.Case Title: WINZO PVT LTD AND DIRECTORATE OF ENFORCEMENTCase No: WP 36998/2025

Karnataka High Court Asks ED To Consider Bank Guarantee For De-Freezing Winzo's ₹505 Crore Account Amid Money Laundering Case

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