Hyderabad fintech founder Pankaj Kumar held as cops bust Rs 13,000 cr online gaming racket; firm acted as 'critical gatekeeper'

HYDERABAD: An Rs 13,000 crore illegal online gaming network allegedly operating through shell firms, fake digital identities and compromised payment rails has been busted, with the arrest of fintech entrepreneur Pankaj Kumar in Hyderabad, officials said Thursday.Kumar, founder of Adsum Advisory Services Private Ltd, was taken into custody by the Directorate General of GST Intelligence Wednesday evening and remanded in judicial custody a day later.Investigators alleged his firm functioned as a critical gatekeeper, clearing fraudulent KYC verifications that allowed shell entities to access banking channels regulated by RBI, enabling large-scale movement of funds linked to real-money gaming platforms.DGGI sources said Adsum Advisory provided third-party fraud detection and customer verification services, including digital KYC, and allegedly facilitated onboarding of shell companies for UPI integration. Those accounts were then used to route proceeds from illegal gaming sites, investigators alleged, adding that proper merchant risk profiling was bypassed in exchange for syndicate-linked proceeds.The probe has widened into a broader crackdown on online gaming networks and associated financial intermediaries. India's online gaming sector is estimated at about $23 billion, or roughly Rs 2 lakh crore, in 2025, officials said.About Rs 100 crore in bank accounts has been frozen and multiple suspects arrested, officials said. The case began after DGGI received inputs on online platforms offering real-money gaming around Hyderabad. Investigators zeroed in on two websites — funinmatch360.com and racejeet247.com — and tracked fund flows outward. As scrutiny expanded, officials said they uncovered an organised syndicate running illegal gaming websites with alleged support from fintech players, including payment aggregators, gateways and technology service providers. Payment aggregators typically rely on third-party verifiers for merchant onboarding and KYC compliance. In this case, investigators alleged shell firms paid verifiers to clear onboarding without adequate scrutiny. Around 100 shell entities across the country were identified. Many allegedly filed GST returns reflecting minimal revenue while processing outsized transactions.Officials also flagged alleged misuse of banks' payout APIs (application programming interface) by technology providers posing as fintech firms. Designed for bulk automated transfers, such systems can process payments without OTPs or manual checks when accessed by authorised clients, allowing rapid movement of funds, investigators said.