ED raids online gaming firms over alleged algorithm manipulation, crypto laundering

Coordinated searches were launched on Tuesday against two prominent online gaming companies by the Enforcement Directorate's (ED) Bengaluru Zonal office in connection with allegations of cheating, manipulation, and possible money laundering. The action was carried out under the provisions of the Prevention of Money Laundering Act (PMLA).

A total of 11 locations were searched by the federal probe agency. These premises included five in Bengaluru, four in Delhi, and two in Gurugram. The raids covered the corporate offices of the two gaming operators, along with the residences of their Key Managerial Personnel (KMPs), including their Chief Executive Officers (CEOs), Chief Operating Officers (COOs), and Chief Financial Officers (CFOs).

The ED's action was initiated based on First Information Reports (FIRs) that had been filed by several victims. In these complaints, it was alleged that the platforms had manipulated their gaming algorithms to create an unfair disadvantage for players. Through this alleged manipulation, the companies were said to have unlawfully profited at the expense of their users.

During the ongoing searches, crucial findings were reportedly unearthed by officials. It was stated that promoters were found to be owning crypto wallets, indicating the potential for money laundering through cryptocurrencies and other digital assets.

Financial records, technical data, and crypto transactions are currently being examined by the agency to assess the extent of the alleged illegal gains and the possible violation of the PMLA. Further investigations are being carried out to trace the full money trail and determine the degree of involvement of the companies' management in the alleged illicit activities.