A report by TRM Labs indicates that Russian individuals and groups are leveraging Kyrgyzstan's burgeoning cryptocurrency industry to evade international sanctions, following the restrictions imposed after Russia's invasion of Ukraine in 2022. The research reveals that Kyrgyzstan, which had a virtually nonexistent crypto sector until recently, now serves as a front for platforms linked to the Russian exchange Garantex, which was shut down for illicit activities. According to the findings, these Kyrgyz platforms facilitate substantial ruble-to-crypto transactions and often share registration details, hinting at shell company behavior. Despite the growth in cryptocurrency transactions from $59 million in 2022 to $4.2 billion in the first half of 2024, experts assert that this rise is primarily driven by Russian demand rather than local adoption. The lack of governance and anti-money laundering measures in Kyrgyzstan raises concerns about its vulnerability to exploitation by corrupt actors and sanctioned entities.

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