A report by UK-based TRM Labs indicates that Russian entities are exploiting Kyrgyzstan's cryptocurrency industry to circumvent international sanctions. The investigation highlights that Kyrgyzstan, which had a negligible crypto sector before the 2022 invasion of Ukraine, now mostly comprises platforms linked to the shuttered Russian exchange Garantex. Many Kyrgyz exchanges share addresses and contact information, suggesting they operate like shell companies. The growth of this sector, driven by Russian demand, has led to substantial transaction volumes, with Russian-backed stablecoins facilitating large ruble-to-crypto exchanges. Moreover, entities such as the Rusich Group have been identified using these exchanges for illicit financial activities. Experts note that Kyrgyzstan’s political environment, characterized by weak checks and balances, increases the risk of exploitation for illicit flows, as reflected in its low score on the Transparency International Corruption Perceptions Index. Without stronger regulatory measures, the country remains vulnerable to financial malpractices linked to sanctioned Russian entities.

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