A report from TRM Labs reveals that Russia-linked activities dominate Kyrgyzstan’s cryptocurrency landscape, which was nearly nonexistent before the 2022 invasion of Ukraine. The report indicates that Kyrgyzstan serves as a front for crypto platforms associated with the now-closed Russian exchange Garantex. It highlights that many Kyrgyz crypto platforms share addresses and details, typical of shell companies. Despite Kyrgyzstan's pro-crypto legislation, which was implemented in early 2022, there is little local demand for these services. Instead, the industry primarily caters to Russian entities seeking to bypass international sanctions. The report identifies connections between Kyrgyz exchanges and Russian groups, such as Rusich Group, facilitating illicit financial flows. The lack of checks and balances and poor governance in Kyrgyzstan increases the risk of exploitation by corrupt actors and sanctioned entities. With the growing number of licensed virtual asset service providers (VASPs) and no signs of industry contraction, the findings underscore concerns about the regional implications of Kyrgyzstan's crypto ecosystem on international financial systems.

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