Has Russia turned Kyrgyzstan’s booming crypto market into a backdoor for moving funds? A new report sheds light on how Kyrgyz-registered exchanges are helping Russian networks evade sanctions.
Summary
- TRM Labs says Kyrgyzstan-based crypto exchanges are helping Russian networks to reroute funds.
- Kyrgyzstan’s crypto industry is thriving with billions in transactions, but weak oversight leaves it vulnerable to misuse.
- The Russian ruble-backed stablecoin A7A5 and shell VASPs tied to sanctioned groups are at the center of this growing sanctions evasion network.
According to TRM Labs, Kyrgyzstan’s crypto industry has exploded from near-zero to billions in activity since passing its “On Virtual Assets” law back in 2022. By October 2024, authorities had issued 126 virtual asset service provider (VASP) licenses, with licensed platforms recording $4.2 billion in transactions in the first seven months of 2024 alone.
But with the region’s relatively weak oversight on the local industry, the rapid growth has made it an attractive base for entities seeking to bypass sanctions.
Kyrgyz crypto exchanges under scrutiny
TRM Labs’ report points to crypto exchanges Grinex and Meer, which sprang up in Kyrgyzstan shortly after U.S.law enforcement disrupted Russia’s Garantex in March 2025.
On-chain analysis suggests both firms, suspected to be successors, used similar wallet infrastructure and transaction patterns as Garantex, helping Russian users move funds through A7A5, a Russian ruble-tied stablecoin that has long come under scrutiny.
Breakdown of illicit crypto volumes flowing through Kyrgyz-registered exchanges, per TRM Labs
Crypto.news reported earlier in June that an FT research revealed that the A7A5 stablecoin has quietly moved billions since launch, and has ties to sanctioned entities that suggest it may be part of broader efforts to bypass Western sanctions and enable cross-border payments for Russian entities.
Read more: Russian ruble-backed stablecoin A7A5 moves $9.3B in four months: report
Another exchange, Envoys Vision Digital Exchange (EVDE), was found to have ties to wallets linked to the Rusich Group, a sanctioned Russian paramilitary organization. Many of these platforms also display signs of being shell companies, including identical registration addresses, shared founders, and recycled contact information, suggesting coordinated or shared illicit control.
Why Kyrgyzstan must tighten controls
TRM Labs warns that while Kyrgyzstan may be exploited rather than complicit, weak oversight leaves the door wide open.
Without tighter controls on VASP registrations, clearer ownership rules, and stronger checks on shell companies, Russia’s financial networks will keep exploiting the country’s crypto infrastructure.
If left unaddressed, similar tactics could also spread to neighboring Kazakhstan and Uzbekistan, which are already rolling out crypto-friendly regulations, undermining international sanctions.
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