The Karnataka High Court has issued a stern warning to the Enforcement Directorate (ED) regarding its appeal against the bail granted to Paavan Nanda, cofounder of the gaming platform WinZO. The court indicated that a cost of ₹1 Lakh could be imposed if the appeal is found to be unnecessary.
Justice S Rachaiah highlighted that the ED must demonstrate either a breach of bail conditions or evidence of Nanda attempting to conceal facts to avoid incurring the penalty. The next hearing is scheduled for April 23.
Background of the Case
This legal matter follows a Bengaluru sessions court's decision in February to grant bail to Nanda in connection with a money laundering investigation initiated by the ED.
Allegations Against WinZO
The ED's case involves multiple FIRs filed across Karnataka, Rajasthan, and Delhi, citing serious allegations such as:
- Cheating
- Impersonation
- Misuse of KYC details
- Wrongful blocking of user accounts
According to the agency, WinZO's platform allegedly utilized algorithmic manipulation and bots, resulting in wrongful gains estimated at around ₹177 Crores. The ED also claims that funds were diverted to overseas subsidiaries and laundered through cloud infrastructure hosted on Amazon Web Services.
Financial Implications
The agency has raised concerns about large-scale identity misuse and cross-border fund flows totaling approximately $55 million. Nanda has denied all allegations and asserts his cooperation with the investigation, while also challenging the legality of the ED's search and seizure operations.
Impact on WinZO
This ongoing legal battle has placed WinZO in a precarious position, with significant operational challenges following the ED's actions in late 2025. The agency's investigations led to asset freezes under the Prevention of Money Laundering Act, affecting funds estimated between ₹700 to ₹880 Crores.
Additionally, the ED claims that WinZO continued its real-money gaming operations in international markets, including the US, Brazil, and Germany, despite regulatory restrictions in India.
Current Status
As the company navigates these challenges, it has reportedly reduced its operations and seen a substantial decrease in its workforce. Legal disputes with vendors, including a case from Paytm regarding unpaid dues, further complicate WinZO's situation. The company is also awaiting a ruling from the high court concerning the freezing of its funds while its cofounders contest the ED's allegations.
