A report from UK-based TRM Labs reveals that Russia-linked activities dominate Kyrgyzstan's cryptocurrency industry, which was nearly non-existent before the 2022 invasion of Ukraine. The findings suggest that Kyrgyzstan is now facilitating international sanctions evasion through its cryptocurrency platforms, particularly by linking to the shuttered Russian exchange Garantex. TRM Labs identified numerous Kyrgyz exchanges utilizing the A7A5 stablecoin to process transactions, and many platforms appear linked to common addresses and founders, indicative of shell companies. Despite Kyrgyzstan's rapid crypto growth, driven by Russian demand, little local retail interest exists. This situation is aggravated by weak political structures that increase vulnerabilities for illicit financial activities. Additionally, organizations such as the Rusich Group have been identified utilizing Kyrgyz exchanges to circumvent sanctions, indicating a broader trend of Russian entities exploiting Kyrgyzstan’s political environment. With Kyrgyz crypto service providers increasing in number and a lack of robust regulatory checks, experts warn of ongoing risks for both regional stability and international financial systems.

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