Free Fire and Coda Payment investigation: Bank accounts with ₹68.53 crores frozen by ED

The Directorate of Enforcement (ED), on 27 September 2022, conducted searches on three Coda Payments India Private Limited (CPIPL) premises as part of an ongoing probe against Garena Free Fire and CPIPL under the Prevention of Money-laundering Act (PMLA), 2002. The law enforcement agency has also frozen all Coda's bank accounts worth ₹68.53 crores (~ $8.369 million).

Furthermore, authorities claimed the search uncovered details about CPIPL solely acting as an agent of Coda Payments Singapore and remitting the collected money back to the parent company. The action comes after multiple FIRs were registered against Free Fire.

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ED investigates Garena Free Fire and Coda Payments India for money laundering

Government authorities alleged that CPIPL, which processed and collected payments from Garena Free Fire, Teen Patti Gold, Call of Duty, and others, resorted to inappropriate deductions. These deductions were mainly from unsuspecting children using in-game tokens.

Further, it has been claimed that developers such as Garena and CPIPL structured the payment system accordingly so that after the first successful transaction, a notification would pop-up seeking authorization to make all future payments seamless without authentication.

Since younger audiences are unaware of these nuances, they typically grant permission without fully understanding the scope of the outcome. Authorities claim the company exploited the nievity of their player base.

Authorities said that during the investigation, they found CPIPL was funneling money from the buying and selling of digital tokens to the parent company in Singapore. Coda Singapore manages the operations of Codashop, and there is no real sale or purchase of digital material by CPIPL.

The ED's statement also revealed that Garena Free Fire does not have a company or presence in India and is based out of Singapore.

A statement from ED about the remitted money read:

"Till date the amount collected by CPIPL is Rs. 2850 Crore, out of which Rs. 2265 Crore has been remitted outside India after retaining a certain percentage of revenue for payment of taxes and nominal profits."

Furthermore, the agency added the following about freezing the funds:

"To prevent the company from alienating the Proceeds of Crime which it has collected through unauthorized deductions from the accounts of unsuspecting customers, all the bank accounts, merchant Ids in Payment gateways and Fixed Deposits of CPIPL with balance as on date of Rs. 68.53 Crore have been frozen under PMLA, 2002."

Further investigation of the matter is underway. Audiences should closely follow the social media handles of respective agencies for real-time information.