A report from TRM Labs has revealed that Kyrgyzstan is being utilized by Russian entities to bypass international sanctions through its burgeoning cryptocurrency industry. Prior to the Russia-Ukraine conflict in 2022, Kyrgyzstan's crypto sector was virtually nonexistent, but has since been transformed as Russian demand drove its growth. The research indicates that Russian-linked platforms, such as Garantex—and likely its rebranded entity Grinex—are at the forefront. These platforms facilitate significant transactions involving Russian stablecoins like A7A5 and are characterized by similarities among their registration details, suggesting they may be shell companies. Notably, Kyrgyzstan's crypto exchanges are increasingly tied to illicit activities, including connections to paramilitary groups. Analysts describe the political environment in Kyrgyzstan, marked by weak governance and lack of transparency, as fostering conditions for such exploitation. As of now, Kyrgyzstan boasts over 126 licensed virtual asset service providers (VASPs), indicating that its cryptocurrency sector is set to continue expanding without strong regulatory measures to counteract these trends.

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