The Karnataka High Court on Friday warned the Enforcement Directorate (ED) that it would impose costs of `1 lakh if it found that the agency’s appeal against the bail granted to real money gaming company WinZo cofounder Paavan Nanda was “unnecessary”.
Justice S Rachaiah told ED’s counsel that the agency would have to establish violation of bail conditions by Nanda or that there was an active attempt by him to suppress facts of the case. Without these two, if the court were to find the ED’s challenge to be an unnecessary one, it would impose costs of INR 1 lakh on the agency, the judge said and posted the matter to April 23 for next hearing.
In February, a local court in Bengaluru granted bail to Nanda in a money-laundering case registered against him by the ED. Nanda has denied ED’s charges, asserted full cooperation with the investigation and has challenged the legality of search and seizure operations conducted by the agency.
The ED case against WinZo promoters arose from predicate offences as per FIRs registered in Bengaluru, Rajasthan and Delhi. In February this year, ED’s Bengaluru zonal office provisionally attached movable properties worth about USD 56 million held by WinZo in bank accounts in the US and Singapore in connection with the ongoing probe under the Prevention of Money Laundering Act (PMLA). The funds were held in the names of overseas shell companies of WinZo and were operated and controlled by Nanda and Rathore, the ED said in an earlier statement. ED officials conducted search and seizure operations at WinZo’s office, the residences of its directors, and the company’s accounting firm last November and December.
The evidence gathered during the search and subsequent investigations revealed, according to the ED, that the company was engaged in criminal activities and unscrupulous practices. Customers were made to play with AI bots/algorithms and not with humans in real money games. The company concealed such practices under misleading terms such as EP (Engagement Play), PPP (Past Performance of Player), and Persona.
WinZo generated proceeds of crime in the form of ‘rake commission’ from matches played by bots with real players. The app used bots to induce people to play more and restricted cash withdrawals thus appropriating customers’ to play more and restricted cash withdrawals, thus appropriating customers’ funds.
This mechanism enabled the company to convert users’ deposits into revenues, and in this way, the company generated illegal proceeds of about INR 3,522 crore between FY22 to FY26 (till August 22, 2025), per an ED statement. The company moved a part of these proceeds to the US and Singapore under the garb of overseas investments, the ED has alleged.
The company, however, conducted all its day-to-day business activities and maintained bank accounts in India. The ED has so far frozen INR 1,194 crore in these accounts in connection with the case.
