A report by TRM Labs reveals that Kyrgyzstan's cryptocurrency industry is largely being utilized by Russian entities to circumvent international sanctions. This surge in usage follows the Russia-Ukraine conflict, which propelled Kyrgyzstan's crypto sector from virtually nonexistent to significant. The report highlights that almost all of Kyrgyzstan's crypto activities are linked to Russia, especially after the closure of the Russian exchange Garantex. It indicates that some Kyrgyz platforms exhibit shell company characteristics, sharing similar residential addresses and contacts. Major Russian players, including entities like the Rusich Group, have been identified using these platforms for large-scale financial transactions. Additionally, Kyrgyzstan has seen a dramatic increase in transaction volumes from Russian demand rather than domestic interest. This situation is further complicated by weak governance and regulatory structures in Kyrgyzstan, which could allow illicit financial flows to persist, as noted by Transparency International.

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