Russian Entities Circumvent Sanctions via Kyrgyzstan's Crypto Infrastructure: 23% Surge in Russian Investments

Russian entities are increasingly exploiting Kyrgyzstan’s cryptocurrency infrastructure to circumvent Western sanctions, according to a report by TRM Labs. The firm’s analysis reveals that platforms such as Grinex, Meer, and EVDE, registered in Kyrgyzstan, have become critical nodes in a network enabling Russian actors to convert rubles into stablecoins like A7A5. These platforms are directly linked to Garantex, a Russian exchange banned in 2025, which shut down after being designated as a sanctions target. The interconnectedness between Kyrgyz exchanges and Garantex—including shared addresses, founders, and contact information—suggests coordinated efforts to create shell firms that facilitate illicit financial flows [1].

The strategy leverages Kyrgyzstan’s regulatory environment, which allows foreign investors to establish Virtual Asset Service Providers (VASPs) without physical presence in the country. A 2022 law recognizing cryptocurrencies as property and establishing a licensing framework for VASPs has been exploited to create a “shadow network” of exchanges. For instance, Grinex began accepting A7A5 withdrawals just days after Garantex’s closure, indicating a potential overlap in operations. The use of stablecoins, typically pegged to the U.S. dollar, has been repurposed to enable ruble conversions, bypassing restrictions on traditional banking channels [1].

The scale of activity is significant. In 2024, VASPs in Kyrgyzstan processed $4.2 billion in transactions within the first seven months, a sharp increase from $59 million in 2022. This growth correlates with heightened Russian demand for alternative financial systems amid Western sanctions. Russian-Kyrgyz trade has also surged, reaching $3.5 billion in 2024, with Russian investments in the country rising by 23 percent. Exports of dual-use goods, including drones and anti-UAV equipment, are increasingly routed through Kyrgyzstan, often originating from China. Chinese shipments of these items to Central Asia rose by 64 percent between 2022 and 2023, reaching $1.3 billion [1].

The report highlights risks to global financial security. Shell companies and interconnected exchanges obscure the origins of transactions, complicating efforts to track sanctions evasion. TRM Labs noted that some Kyrgyz platforms are linked to paramilitary groups, further entrenching the illicit financial ecosystem. The lack of robust anti-money laundering (AML) measures in Kyrgyzstan exacerbates the problem, as the 2022 licensing framework prioritized innovation over compliance [1].

International concerns are mounting. Western nations are urging Kyrgyz authorities to strengthen oversight and collaborate on monitoring cross-border crypto flows. The report warns that without stringent enforcement, similar tactics could spread to other jurisdictions in the region. Analysts emphasize the need for transparency and alignment between national crypto policies and global sanctions frameworks. TRM Labs calls for enhanced surveillance of regional exchanges and tighter cooperation to close regulatory loopholes [1].

Source:

[1] [TRM Labs Report: Some Russian Entities Are Using Kyrgyzstan’s Crypto Ecosystem to Evade Sanctions](https://www.panewslab.com/en/articles/luwjj0i3)

[2] [Russian Entities Are Using Kyrgyzstan-Based Cryptocurrency Platforms to Circumvent Sanctions](https://www.bitget.com/news/detail/12560604881925)

[3] [How Russian Entities Exploit Kyrgyzstan’s Crypto Boom to Evade Sanctions](https://www.btcc.com/en-IN/square/decryptCO/697079)

[4] [TRM Labs: Russian Entities Are Evading Sanctions Through Kyrgyzstan’s Cryptocurrency Platform](https://0xzx.com/en/2025072711205680278.html)

[5] [Russia Uses Kyrgyz Crypto Hub to Evade Sanctions and Fund Ukraine War: TRM Labs](https://leapdigitalinvestments.com.au/)