Former CFO Claims Gameskraft Founders Knew of ₹250 Crore Fund Diversions

The alleged ₹250-crore diversion of funds from online gaming unicorn Gameskraft may not have been a case of a lone executive gone rogue, according to a statement attributed to former chief financial officer Ramesh Prabhu and reproduced in a Karnataka High Court order.

Prabhu, who was earlier accused by Gameskraft of siphoning off company funds for personal futures and options (F&O) trading, told the Enforcement Directorate (ED) that the transfers were carried out under the instructions of the company's founders and were presented internally as investments that would eventually be returned to the business.

The statement, reproduced in the June 16 Karnataka High Court judgment examining the legality of arrests made by the ED, forms a key pillar of the agency's money laundering investigation against Gameskraft's promoters.

According to the order, Prabhu responded to an ED summons under Section 50 of the Prevention of Money Laundering Act through an email dated November 18, 2025. In that communication, he allegedly stated that funds were diverted "under the instructions" of founders Vikas Taneja, Deepak Singh Ahlawat, Prithvi Raj Singh and Deepak Kumar Jha.

'Protect Company Money'

In the statement reproduced by the court, Prabhu traced the origins of the arrangement back to 2019, when Games24x7, operator of RummyCircle, initiated legal proceedings against certain Gameskraft founders over alleged theft of source code and customer databases.

Prabhu claimed the litigation prompted concerns among the founders regarding funds accumulating within the company. According to his statement, he was allegedly asked to gradually move money out of the company and deploy it in stock market investments until it could be brought back later.

"They told me once we make profits we will bring the money back in the company," Prabhu allegedly stated in the communication reproduced by the court.

F&O Bets Through Personal Accounts

Prabhu told the ED that the diverted funds were invested in futures and options trading through his Zerodha account. He also claimed to have opened another trading account in his wife's name without her knowledge.

According to the statement, all the money transferred from Gameskraft eventually ended up being lost in derivatives trading. He further claimed he did not personally profit from the transactions.

The assertion contrasts sharply with Gameskraft's earlier police complaint, which portrayed the matter as unauthorised fund diversion by a senior finance executive acting alone.

Mutual Fund Entries and Alleged Fabrication

Perhaps the most significant aspect of Prabhu's statement concerns how the transactions were allegedly recorded in company books.

Prabhu claimed the money transferred into his accounts was reflected in Gameskraft's financial statements as mutual fund investments. He further alleged that founders asked him to create fake mutual fund statements for audit purposes. According to the statement reproduced in the order, he refused to do so during FY24 and FY25.

The allegation aligns with Gameskraft's own police complaint, which had stated that fabricated investment records and false mutual fund statements were used to conceal fund diversions.

'Both Signatories Received Alerts'

The former CFO also disputed suggestions that transfers could have escaped notice.

Prabhu told the ED that the RBL Bank account from which funds were moved required two authorised signatories — himself and co-founder Prithvi Raj Singh. He claimed both signatories received email and SMS notifications whenever transactions were executed.

That assertion could become a key point of scrutiny as investigators seek to establish who knew about the movement of funds and when.

IPO Pressure

Prabhu's statement further alleges that as Gameskraft prepared for a potential public listing, pressure mounted to restore the missing money.

According to the court record, he claimed the company was planning an IPO within two years and needed the funds reflected in its books. Since the money had already been lost in F&O trading, he alleged that founders blamed him for the losses and later asked him to leave the country while assuring him they would "handle the situation."

He also alleged that founders avoided written communications and issued oral instructions regarding the transactions.

ED's Money Laundering Theory

The ED has also relied heavily on Prabhu's statement in building its case.

In grounds of arrest reproduced by the High Court, the agency alleged that Gameskraft's founders were "hand in glove" with the former CFO, who had diverted and laundered ₹250 crore under the guise of investments in futures and options and mutual funds.

The agency further alleged that part of the proceeds of crime were laundered through investment structures and dividend payments before being routed into family-controlled entities and properties.

The Karnataka High Court's order does not make any findings on the veracity of these allegations. The judgment primarily examines whether the ED possessed sufficient material to justify the arrests under the Prevention of Money Laundering Act.

However, Prabhu's statement marks a significant escalation in the matter. While Gameskraft's original complaint portrayed him as the architect of a years-long fraud, the former CFO has now alleged that the investment scheme was undertaken with the knowledge and direction of the company's top leadership — a claim that lies at the heart of the ED's widening investigation.

Founders released from jail

In a significant setback to the Enforcement Directorate (ED), the Karnataka High Court on Tuesday declared the arrest of Gameskraft founders Deepak Singh, Prithvi Raj Singh and Vikas Taneja illegal and ordered their immediate release, holding that the central agency had failed to adhere to the statutory safeguards governing arrests under the Prevention of Money Laundering Act (PMLA).

The order was passed by Justice M. Nagaprasanna, who had reserved judgment after hearing extensive arguments from both sides over the legality of the founders' arrest following searches conducted by the ED on May 7 and 8.