A report by TRM Labs reveals that Kyrgyzstan's cryptocurrency sector is being utilized by Russian entities to circumvent international sanctions, primarily in the aftermath of the Ukraine invasion in 2022. The analysis indicates that almost all of Kyrgyzstan's crypto activity is linked to Russia, with many local platforms mirroring the structures of shell companies. The report highlights that the Kyrgyz crypto industry was nearly absent before the war but has surged due to Russian demand, correlating with new laws recognizing cryptocurrencies as property in January 2022. Notably, the shuttered Russian exchange Garantex is suspected of rebranding to Grinex to continue operations. The sector's growth is considered a response to enhanced geopolitical pressures, with Russian organizations reportedly using Kyrgyz exchanges for large-scale transactions involving ruble-to-crypto activities. The political landscape in Kyrgyzstan, characterized by weak governance, raises concerns over corruption and potentially facilitates the exploitation of local financial systems by sanctioned Russian entities.

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