Of late, the Enforcement Directorate (ED) has been cracking down hard on foreign companies in India. As part of several probes, it raided the offices and seized assets of several Chinese smartphone vendors, such as Vivo, Oppo and Xiaomi. Now, Coda Payments India, makers of popular game Freefire, have fallen on the radar of the India agency after its premises were searched as part of an investigation into money laundering.
As part of the probe, ED has frozen all the bank accounts, merchant IDs in payment gateways and fixed deposits of the Coda Payments India Private Limited (CPIPL) – amounting to a total of ₹68.53 crores ($8.4 million). In a tweet, the ED informed that it had searched three premises of Coda Payments India, which is the distributor of Free Fire, a popular battle royale game that had a lucrative market in India.
Published by Garena, the digital entertainment arm of Singapore-headquartered Sea, Free Fire went down the PUBG way and was an extremely popular choice among mobile gamers in India. In fact, statistics shared by App Annie shows that out of its 75 million globally monthly active users, 40 million of those users hailed from India.
However, changing circumstances forced Free Fire to be booted off the Indian market as part of a larger crackdown on 54 apps this February as the Indian government cited security concerns, believing that the game was sending the data of Indian users to servers in China.
The current investigation by the ED is fuelled by multiple FIRs that have been registered both against the company and the Free Fire game. The probe looks into the alleged unauthorised deductions from the accounts of online gamers. It is also alleged that these payments were deducted from the accounts of the unsuspecting gamers, mostly children, and then transferred to Singapore. Coda has been alleged to collect payments from other games such as Teen Patti Gold and Call of Duty as well.
According to the ED, the CPIPL has, to date, collected about ₹2,850 crores, and sent ₹2,265 crore outside India after they retained a certain percentage of the revenue for payment of taxes and nominal profits. Once the gamers had conducted a transaction, a notification would pop up to seek permission to make subsequent payments without any authentication.
“As the 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,” the agency said in a statement. It also found that Coda Payments India was incorporated to act solely as an agent of Coda Payments Singapore, and that Garena does not have a company or presence in India in the country.