Free Fire Money Laundering Investigation: India’s ED Raids Coda Payments

The Enforcement Directorate (ED) of India searched the premises of Coda Payments India (the company behind the popular Codashop marketplace) as part of an ongoing investigation into Free Fire. All Coda accounts which reportedly contained INR 68.53 Crore ($8.36 Million USD) have been frozen. Multiple First Investigation Reports (FIRs) have been filed against Coda Payments India Pvt. Ltd. and Garena Free Fire at the same time.

Coda Payments claims to be partnered with multiple game publishers including the likes of Tencent, EA, NetEase Games, Krafton, Activision Blizzard, Garena, and more. Its Codapay API service allows game publishers to accept over 300 payment methods through in-game or web purchases.

What is the ED and why is it investigating Free Fire?

The Directorate of Enforcement is a law enforcement and economic intelligence agency responsible for enforcing economic laws and fighting financial crime in India. It is part of the Department of Revenue, Ministry of Finance, and the Government Of India.

According to a report by LiveMint, the 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.”

The ED revealed that in the name of monetizing and generating revenue, Coda Payments was resorting to unauthorized deductions from the end users. It was also alleged that both Garena and Coda Payments were working together to target players to charge them without authentication. Coda Payments allegedly asked permission to make all subsequent payments without any authentication after players would complete one successful transaction.

With children being easy targets for the company, they inadvertently gave permission to these apps. Unlike Coda Payments which has a company set up in India (Coda Payments Pvt. Ltd.), Free Fire’s publisher Garena does not and it operates from Singapore.

Coda Payments India Pvt. Ltd. has been collecting money in the name of sale of digital content and has been transferring the money to its parent company in Singapore. The company’s accounts have been frozen.

Free Fire was banned in February along with over 50 apps. At the time it was thought that the app was banned in connection with other apps that were allegedly sending data to Chinese servers. The Indian government did not reveal the reason behind the game’s ban but with the ED cracking down on the game, the alleged money laundering could be the reason behind the game’s ban. Free Fire Max, which is a different version of Free Fire with better graphics, continues to be available in India at the time of writing.