A report from TRM Labs reveals that Kyrgyzstan is effectively acting as a conduit for Russian entities seeking to evade international sanctions, particularly through its burgeoning cryptocurrency industry. This activity, which accounted for nearly all of Kyrgyzstan’s crypto usage, has surged since the Russian invasion of Ukraine in 2022, a period during which the country’s crypto scene was described as nearly non-existent. Experts noted that many Kyrgyz exchanges are linked to the defunct Russian exchange Garantex and often share common addresses and contact details typical of shell companies. Despite a significant uptick in transaction volumes—rising from $59 million at the end of 2022 to $4.2 billion in the first half of 2024—there is little evidence of genuine local demand. This rapid growth is largely driven by Russian users. The report highlights the risks posed by Kyrgyzstan's weak governance and political environment, which create vulnerabilities for illicit financial activities, indicating that without stronger regulatory measures, the country may continue to be exploited by those circumventing sanctions.

Source 🔗