Karnataka High Court asks Winzo for details of user deposits, winnings and overseas entities

The Karnataka High Court on Wednesday sought detailed financial and operational disclosures from Winzo while hearing the real-money gaming platform's challenge to the Enforcement Directorate’s freezing of over ₹500 crore under the Prevention of Money Laundering Act (PMLA)..Justice Suraj Govindaraj directed Winzo to place on record comprehensive particulars of the total amounts deposited by users on its platform, the aggregate winnings paid out and the overall losses incurred. The Court also asked the company to disclose details of all its subsidiaries, associates and related entities, both in India and abroad, along with their turnover and income..The High Court further sought clarity on whether Winzo, its promoters or affiliated entities maintained bank accounts or carried on business outside India. On the issue of defreezing of accounts, the Court asked the ED whether it would defreeze Winzo's bank account if the company provides a bank guarantee corresponding to the frozen amounts.The case will be next heard on December 19..The Court was hearing Winzo's challenge to orders passed on November 21 freezing its bank accounts, escrow accounts and other financial assets under Section 17(1A) PMLA..On the last date of hearing, the Court asked the ED to take instructions on whether CCTV footage seized during searches conducted at Winzo’s office can be supplied to the company. .During today's hearing, Advocate Madhu Rao, appearing for the ED, alleged that searches conducted at the company’s premises and at the residences of its directors led to the seizure of incriminating digital material, emails and cloud-hosted data. According to the agency, the material showed that Winzo had deployed a concealed algorithm known as “PPP – Fast Play Performance” in its real-money games, despite representing to users that its platform was free from bots or automated gameplay.The ED alleged that under the PPP mechanism, real-time users were matched against algorithm-controlled profiles generated using historical gameplay data of existing users, without disclosure or consent. The agency claimed that this resulted in illicit gains of about ₹177 crore over a period of around 14 months, with corresponding losses to genuine users..The agency further alleged that Winzo imposed restrictive withdrawal conditions, allowing unlimited deposits but permitting withdrawals only of “winning amounts”, subject to daily caps based on loyalty levels. It was also alleged that user wallets were blocked arbitrarily, leaving about ₹43 crore classified as payable to users.According to the ED, funds generated through these alleged practices were layered through multiple accounts and routed to overseas subsidiaries, including entities in the United States and Singapore. The agency claimed that day-to-day management of these foreign entities was effectively controlled from India and that significant sums had been transferred abroad, including into cryptocurrency wallets.Opposing interim relief, the ED submitted that the freezing orders were necessary to prevent dissipation of funds and to safeguard amounts that could ultimately be restituted to affected users under the PMLA. It also contended that Winzo had an effective statutory remedy before the adjudicating authority..Winzo, represented by Senior Advocate Sandesh Chouta, offered to furnish a bank guarantee as security in exchange for release of the frozen funds. The ED sought time to obtain instructions on whether such a guarantee would be acceptable. Justice Govindaraj recorded the submissions and directed both sides to place the requisite details on record..Follow Bar and Bench channel on WhatsAppDownload the Bar and Bench Mobile app for instant access to the latest legal news.