Enforcement Directorate Raids Coda Offices in India in Money Laundering Case Involving Garena Free Fire

The Enforcement Directorate (ED) on Tuesday searched the Coda offices in India as part of a money laundering investigation into the fintech firm and Sea Ltd's Free Fire.

Manoj

Published On: September 28, 2022

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The Enforcement Directorate (ED) has stated that it conducted searches at three premises of Coda Payments Pvt Ltd India (gaming top-up platform) as part of a money laundering probe into the fintech firm and Sea Ltd’s Free Fire. The agency raided the coda offices on Tuesday (27 September).

Enforcement Directorate (ED) has stated that the agency has begun the investigation into the Coda companies after receiving several complaints that the platforms made unauthorised deductions from the accounts of online gaming users. As part of the investigation, ED has also seized INR 68.53 crores in fixed deposits, wallets hosted by numerous payment gateways, and bank accounts held by the Singapore-based firm.

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ED Raids Coda Offices in Money Laundering Probe Involving Garena Free Fire

The searches were carried out as part of an ongoing inquiry into Coda Payments and the ‘Garena Free Fire’ mobile application under the Prevention of Money Laundering Act (PMLA), 2002, and there were many FIRs filed against the two companies.

“It is alleged that Coda Payments India Pvt Ltd, which facilitates and collects payments from end users (mostly unsuspecting children) of games like Garena Free Fire, Teen Patti Gold, Call of Duty, etc, in the name of monetising and generating revenue for web and game publishers, is resorting to unauthorized deductions from end users of these games in the name of selling digital tokens…which are used by end users to enhance their playing experience,” told ED in an official statement, as reported by Indian Express.

ED has conducted searches in 3 premises pertaining to M/s Coda Payments India Pvt Ltd in connection with an ongoing investigation under PMLA, 2002 against M/s Coda Payments India Pvt. Ltd and ‘Garena Free Fire’ mobile game & freezed bank account balance of Rs. 68.53 Crore.
— ED (@dir_ed) September 27, 2022

The crime-fighting agency also stated, “It is further alleged that game developers like Garena and M/s Coda Payments India Pvt Ltd have intentionally designed the payment mechanism in such a way that after the first successful transaction, a notification pops up, which seeks permission to make subsequent payments without any authentication. As children are not aware of these technical terms, they just click on the notification in a routine manner and end up giving the authorisation to make all future payments without any further authentication.”

Codashop is a digital service platform where users can buy in-game assets of several online video games including Garena Free Fire, Call of Duty Mobile, Apex Legends Mobile, Valorant etc. Garena, which publishes ‘Free Fire’ has escaped the raids as it does not have a company or presence in India and is operated from Singapore.

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The ED described Coda India as a “conduit” for remitting money outside of India and stated that the Indian branch of the company is simply formed to “act as an agent” for its Singapore-based parent company.

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The Indian entity is also accused of collecting money from consumers under the pretext of selling digital material, while the actual services were channelled through Coda Singapore. According to the ED, Coda India made no real sales or purchases of digital content. “It is only a conduit to remit funds outside India. Till date the amount collected by CPIPL (Coda India) is INR 2,850 Cr, out of which, INR 2,265 Cr has been remitted outside India after retaining (a) a certain percentage of revenue for the payment of taxes and nominal profits,” the statement added.

Indian Government banned Free Fire back in February 2022 alongside other 53 apps as they were believed to be sending Indian user data to Chinese servers. Singapore eventually intervened, questioning Indian officials about why Free Fire was targeted despite the fact that Sea has its headquarters in the rich city-state, but it remains barred. However, the enhanced version of Garena’s hit battle royale game, Free Fire MAX is still accessible in the Indian region.

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