A report from TRM Labs reveals that Kyrgyzstan's cryptocurrency industry is heavily utilized by Russian entities to bypass international sanctions. Following Russia's 2022 invasion of Ukraine, the crypto sector in Kyrgyzstan grew rapidly, largely driven by Russian demand. The report highlights that many Kyrgyz platforms are linked to the shuttered Russian exchange Garantex, and exhibit characteristics typical of shell companies. It indicates that Russia-linked activities make up nearly all of Kyrgyzstan's crypto trading, which had been virtually nonexistent prior to the invasion. There is a significant focus on the A7A5 stablecoin’s role in facilitating transfers between these Russian-linked actors and Kyrgyz exchanges. Furthermore, the report notes that a lack of proper governance in Kyrgyzstan creates vulnerabilities that could be exploited for illicit financial flows. With the country’s crypto sector expanding and regulatory frameworks developing, concerns about transparency and governance are paramount, given Kyrgyzstan's low score on Transparency International's Corruption Perceptions Index. The findings reflect a pressing need for stronger anti-money laundering measures to prevent exploitation by sanctioned entities.

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