A report by TRM Labs reveals that Kyrgyzstan is becoming a hub for Russian crypto operations, primarily to evade international sanctions following the Ukraine invasion in 2022. The analysis indicates that nearly all of Kyrgyzstan's cryptocurrency industry is linked to Russian entities, with many platforms registered at the same addresses, resembling shell companies. The sanctions on Russian exchange Garantex, shut down in March 2023, have led to its suspected rebranding as Grinex, a Kyrgyz platform facilitating substantial ruble-to-crypto transactions. Despite Kyrgyzstan's pro-crypto regulations enacted in January 2022, local demand for cryptocurrencies remains minimal. A significant portion of recent transaction volumes is driven by Russian users, signaling that Kyrgyzstan's crypto sector largely serves as an extension of Russia's. The report highlights the involvement of groups like the Rusich Group and warns of Kyrgyzstan's weak governance, which poses risks for illicit financial transactions.

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