TRM Labs report: Some Russian entities are using Kyrgyzstan's cryptocurrency industry to evade sanctions

According to Decrypt, a new report from UK blockchain intelligence firm TRM Labs suggests that some individuals and groups in Russia are using Kyrgyzstan's cryptocurrency ecosystem to evade international sanctions. Many platforms registered in Kyrgyzstan, including Grinex and Meer, have clear connections with Russian exchanges such as Garantex and use Russian backed stablecoins such as A7A5 to facilitate large-scale ruble to cryptocurrency trading. The report points out that many Kyrgyzstan platforms have the same registered address, contact information, and founder, which is a typical behavior of shell companies. Activities related to Russia account for almost all of Kyrgyzstan's cryptocurrency industry, which was "almost non-existent" a month before the Russia Ukraine war. In addition, the Kyrgyz government passed a law supporting cryptocurrencies in January 2022, effectively treating them as property, and also established a registration system for virtual asset service providers (VASP). Combined with the growing demand from Russia, the passage of this law has led to the rapid development of Kyrgyzstan's cryptocurrency industry. By the end of 2022, VASP's transaction volume reached $59 million, reaching $4.2 billion in the first seven months of 2024 alone.