A report from TRM Labs indicates that Kyrgyzstan serves as a front for crypto platforms linked to the banned Russian exchange Garantex. This shift is attributed to the influx of Russian demand since the invasion of Ukraine, with Russian-linked activities making up almost all of Kyrgyzstan's crypto industry, which was largely nonexistent before 2022. The analysis reveals many Kyrgyz platforms share the same addresses and contact details, resembling shell companies. The report also highlights that platforms like Grinex facilitate ruble-to-crypto transactions using Russian-backed stablecoins. The growth rate of the Kyrgyz crypto sector, supported by a pro-crypto law passed in January 2022, has been rapid, with transaction volumes skyrocketing to $4.2 billion by mid-2024. However, experts warn of the vulnerabilities in Kyrgyzstan's political environment, which may allow illicit financial flows and exploitation. Despite the regulatory backdrop, concerns remain regarding the country's capacity for oversight, as highlighted by Transparency International, which notes the lack of transparency and accountability could enable the financial systems to be misused by sanctioned Russian entities.

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