SUMMARY
The gaming app, called ‘E-Nuggets’, was designed to defraud the customers
During the initial period, the users could also withdraw their wallet balance, but after collecting significant funds, the app deleted their profile
The ED is also investigating whether this app had any connections with the illegal loan apps
Enforcement Directorate (ED) conducted search operations at six premises of the promoters of a fraudulent gaming app, seizing INR 7 Cr as proceeds of crime.
“ED has been carrying out search operations under the provisions of the PMLA, 2002 (on 10.09.2022) at 06 premises in Kolkata, in respect to an investigation relating to the Mobile Gaming Application. Huge cash (more than INR 7 Crore) has been found at the premises,” the financial crimes agency said on Twitter.
The gaming app, called ‘E-Nuggets’, was designed to defraud the customers, ED stated.
The ED noted that during the initial period, the app rewarded the users with a commission and the users could also withdraw their wallet balance without much hassle. This generated confidence among users who started investing heavily in the app for bigger rewards and commissions.
After the app collected a significant amount from the users, it stopped the withdrawals. The app’s promoters posted reasons such as system upgrades or investigations by law enforcement agencies for having stopped withdrawals.
Soon, the gaming app deleted all user data from its servers, including profile information. The ED stated that the users understood the app’s modus operandi then and consequently it was brought to light.
According to an Indian Express report citing sources, the ED is also investigating whether this app had any connections with the illegal loan apps that have come under intense scrutiny. Just last week, the agency conducted searches across six premises in Bengaluru to investigate the role of payment aggregators in connection with these loan apps.
It is prudent to note that India lacks a well-defined policy framework when it comes to online gaming. India saw more than 390 Mn online gamers and online gaming generated $1.3 Bn in revenue in India, according to an EY report.
However, the government is currently working to formulate an online gaming policy. For that, the government has set up an inter-ministerial group. Recently, media reports noted that the group might recommend daily spending caps in their recommendations regarding the online gaming policy.
The inter-ministerial group has also recommended to the Ministry of Electronics and Information Technology (MeitY) to amend the Information Technology Act 2000 to include online gaming as a segment. The rules will also include clauses on self-regulation.
For better regulation, the gaming sector has also been asked by the government to come up with a self-regulatory organisation (SRO).
Gaming in the startup ecosystem is steadily carving a niche for itself, with Dream11, Games 24×7 and MPL hitting unicorn valuations. Last year, gaming company Nazara Technologies also made its debut on the bourses.
