ED flags Rs 3,000 crore siphoning in WinZO case; SC hearing in May

The Enforcement Directorate (ED) on Thursday told the Supreme Court that it is dealing with a “grave” financial irregularity involving alleged siphoning of over Rs 3,000 crore in the ongoing case against online gaming platform WinZO, even as the matter was adjourned to the first week of May.

Appearing for the ED, Additional Solicitor General SV Raju sought additional time to place certain documents on record, underscoring the scale and seriousness of the investigation. The agency’s submission came as it challenged relief granted earlier by the Karnataka High Court, which had directed the release of salaries to employees of WinZO and its related entity.

Raju also questioned the conduct of the respondent company, arguing that while it has claimed an inability to pay employee salaries for the past three months, it has simultaneously engaged multiple high-profile senior counsels, including Mukul Rohatgi, Siddhartha Dave and Sajan Poovayya. 

“The conduct is questionable,” he told the court, suggesting a mismatch between the company’s financial claims and its legal spending.

During the hearing, the bench of Justices MM Sundresh and Prasanna Varale making sharp oral observations on the nature of alleged violations. The bench remarked that such instances of online gaming-related fraud could be “even worse than banking fraud,” reflecting the court’s concern over the broader implications of the case.

The bench also took note of submissions around the regulatory landscape for online gaming. When senior counsel Rohatgi argued that certain gaming formats have since faced regulatory curbs, the court observed that such restrictions were “rightly” imposed, indicating judicial endorsement of tighter oversight in the sector.

The ED’s challenge before the apex court stems from earlier orders of both a single-judge bench and a division bench of the Karnataka High Court, which had directed the agency to release funds to enable payment of employee salaries. According to submissions made in court, salaries for employees of WinZO and its affiliate entity have remained unpaid for nearly three months despite those directions.

The agency has maintained that substantial funds linked to the case are under attachment as part of its investigation under anti-money laundering provisions, complicating the release of payments. It also indicated that further material evidence is being compiled to substantiate its claims of large-scale financial diversion.

Zo Pvt Ltd., a subsidiary of WinZO, had approached the Karnataka High Court challenging a search and seizure operation conducted by the ED on December 30, 2025, at the premises of its outsourced accounting firm, FinAdvantage Consulting Pvt Ltd. 

Following the search, the agency issued an order under Section 17(1A) of the PMLA to freeze Zo’s bank accounts, mutual fund holdings and fixed deposits, citing the need to prevent dissipation of alleged proceeds of crime linked to impermissible real-money gaming activities.  

The dispute highlights the growing regulatory and legal scrutiny facing India’s online gaming industry, particularly around financial flows, taxation and compliance structures. With multiple states having attempted to regulate or restrict certain formats of real-money gaming in recent years, the sector has increasingly found itself at the intersection of policy, enforcement and judicial intervention.

The Supreme Court is now expected to take up the matter again in early May, when the ED is likely to present additional documentation backing its allegations. The outcome could have significant implications not only for the companies involved but also for the evolving regulatory framework governing India’s fast-growing online gaming ecosystem.