A report from TRM Labs reveals that Kyrgyzstan is being used by Russian entities to evade international sanctions through its cryptocurrency sector. Following the invasion of Ukraine in February 2022, Kyrgyzstan's crypto industry emerged as a front for platforms formerly linked to the shuttered Russian exchange, Garantex. The report highlights that nearly all of Kyrgyzstan's crypto activity is driven by Russian users, with platforms showing connections to Garantex and facilitating large-scale crypto transactions using Russian-backed stablecoins. The research also identifies specific cases of sanctioned entities leveraging Kyrgyz exchanges. Despite significant growth, with transaction volumes soaring from $59 million in 2022 to $4.2 billion in early 2024, experts note that this development primarily serves Russian interests rather than local demand. The political environment in Kyrgyzstan, characterized by weak governance and potential for exploitation, raises concerns about the country's vulnerability to illicit financial flows.

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