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ED raids fintech firm in laundering probe, freezes accounts

The ED also froze all of Coda's accounts — a total of Rs 68.53 crore balance — to prevent the company from alienating proceeds of crime collected through unauthorised deductions, the agency stated.

The action came on the basis of multiple FIRs registered against Coda Payments and ‘Garena Free Fire’ mobile game, ED stated.

The Enforcement Directorate (ED) on Tuesday searched three premises of Coda Payments India as part of a probe into suspected money laundering by the fintech firm.

The ED also froze all of Coda’s accounts — a total of Rs 68.53 crore balance — to prevent the company from alienating proceeds of crime collected through unauthorised deductions, the agency stated.

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The action came on the basis of multiple FIRs registered against Coda Payments and ‘Garena Free Fire’ mobile game, ED stated.

“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,” the ED said in a statement.

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“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,” the agency stated. “As children are not aware of these technical terms, they just click on the notification in a routine manner and end up giving authorisation to make all future payments without any further authentication.”

Garena, which publishes ‘Free Fire’, does not have a company or presence in India and is operated from Singapore, it stated.

During Tuesday’s search operation, the ED stated, it was found that Coda Payments India was incorporated “only to act as an agent” of Coda Payments Singapore Pvt Ltd, allegedly for collecting money from the users and remitting it to the parent company.

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“M/s CPIPL has been collecting money in the name of sale of digital content and remitting it to its parent company in Singapore in the name of sale and purchase of digital content. However, the entire operations of Codashop, which sells the tokens, are being managed by Coda Singapore; there is no actual sale or purchase of digital content by CPIPL,” the ED stated.

Noting that Coda India is “only a conduit to remit funds outside India”, the agency stated, “Till date, the amount collected by CPIPL is Rs 2,850 crore, out of which Rs 2,265 crore has been remitted outside India after retaining a certain percentage of revenue for payment of taxes and nominal profits.”

First published on: 28-09-2022 at 01:43:07 am
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