A report from TRM Labs claims that Russian entities are leveraging Kyrgyzstan's cryptocurrency industry to bypass international sanctions. This activity surged following the 2022 invasion of Ukraine, with Kyrgyzstan's crypto sector, previously minor, becoming nearly entirely composed of Russian-linked operations. Notably, platforms like Grinex—suspected of being a rebranded Russian exchange Garantex—facilitate significant transactions involving ruble-to-crypto exchanges using specific stablecoins. Experts point out that illicit financial flows are aided by Kyrgyzstan’s weak governance and political environment, characterized by limited oversight and executive control. There’s substantial evidence suggesting that sanctioned Russian groups, including paramilitary organizations, are using Kyrgyz exchanges to access financial systems. The Kyrgyz government’s pro-crypto laws, enacted in early 2022, have expedited this growth, yet local demand remains minimal. With over 126 virtual asset service providers now licensed in Kyrgyzstan, the nation increasingly plays a critical role in supporting Russian economic activities under sanctions, posing significant regulatory challenges and risks of exploitation by corrupt actors.

Source 🔗