A report from TRM Labs indicates that Kyrgyzstan is serving as a front for Russian-linked cryptocurrency activities, primarily from the shuttered exchange Garantex. The analysis reveals that Russia-related transactions constitute nearly the entirety of Kyrgyzstan's crypto industry, which was virtually absent prior to the Ukraine invasion in 2022. The growth of this industry is attributed to Russian demand rather than local use. Many Kyrgyz platforms operate with shared addresses and details typical of shell companies. Notably, sanctioned entities, including the Rusich Group, utilize these exchanges to navigate sanctions. Despite Kyrgyzstan's pro-crypto laws and growth in transaction volumes, concerns persist over the country's weak governance, which may allow illicit financial flows. Transparency International’s index highlights significant corruption risks, suggesting vulnerabilities that can be exploited by sanctioned entities if robust safeguards are not established.

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