A report by TRM Labs reveals that Kyrgyzstan's cryptocurrency industry, which was nearly nonexistent before Russia's invasion of Ukraine, is now predominantly driven by Russia-linked activity. The study indicates that Kyrgyz platforms have become gateways for Russian entities to evade international sanctions, mainly by facilitating transactions through platforms associated with the shut-down Russian exchange Garantex. Many of these Kyrgyz exchanges are linked through shared addresses and ownership, resembling shell companies. The report highlights the rapid growth in transaction volumes within Kyrgyzstan’s crypto sector, which reached $4.2 billion in the first half of 2024, largely due to Russian demand. Furthermore, entities involved include sanctioned groups like the Rusich Group, which use platforms such as Envoys Vision Digital Exchange. Experts stress that Kyrgyzstan's weak political and governance structures create vulnerabilities, enabling illicit financial flows and exploitation by corrupt actors. Without stronger safeguards, the country remains at high risk of being used for sanctions evasion and corruption in the crypto space.

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