Russian Entities Use Kyrgyzstan Crypto Sector to Evade Sanctions: TRM Labs Report

A UK-based blockchain intelligence firm, TRM Labs, has identified evidence of Russian entities leveraging Kyrgyzstan’s cryptocurrency industry to circumvent international sanctions, according to a July 2025 report. The analysis highlights the Central Asian nation’s crypto platforms as conduits for illicit financial activity, with a significant portion of transactions linked to shuttered Russian exchange Garantex. TRM Labs noted that Kyrgyzstan’s crypto sector, virtually nonexistent before Russia’s invasion of Ukraine in February 2022, now predominantly serves Russian-linked interests.

The report underscores irregularities in Kyrgyzstan’s crypto ecosystem, including shell companies with shared addresses, contact details, and founders. These platforms, such as Grinex and Meer, facilitate ruble-to-crypto conversions using Russian-backed stablecoins like A7A5, which previously routed Garantex funds to Kyrgyzstan. TRM Labs also identified connections between Kyrgyz exchanges and entities like the Rusich Group, a paramilitary organization registered with Envoys Vision Digital Exchange (EVDE). These platforms reportedly interact with cross-border logistics firms and Chinese financial institutions, aiding Russia’s procurement of dual-use goods such as semiconductors and drones.

Kyrgyzstan’s rapid adoption of crypto infrastructure, driven by a pro-crypto law enacted in January 2022, has amplified these risks. The law classified cryptocurrencies as property and established a registration regime for virtual asset service providers (VASPs). By 2024, VASPs in Kyrgyzstan recorded $4.2 billion in transactions during the first seven months alone, compared to $59 million in 2022. However, TRM Labs emphasized that local demand remains minimal, suggesting the sector is an extension of Russian crypto activity. The country’s Ministry of Finance is currently developing a USD-pegged stablecoin, USDKG, further indicating its integration into global crypto networks.

Critics point to Kyrgyzstan’s governance vulnerabilities as a catalyst for exploitation. Transparency International’s 2024 Corruption Perceptions Index ranked Kyrgyzstan 25 out of 100, reflecting “serious concerns” about judicial independence and transparency. Altynai Myrzabekova of Transparency International noted that the nation’s weak checks and balances, coupled with expanding executive power, create opportunities for illicit financial flows. While the organization did not independently verify the specific use of Kyrgyz crypto exchanges by Russian actors, it highlighted the broader risks posed by state capture and opaque resource control in the region.

The report also cited trade data showing increased Chinese exports of dual-use goods to Kyrgyzstan and Kazakhstan, rising 64% between 2022 and 2023 to $1.3 billion. Bilateral trade between Kyrgyzstan and Russia reached $3.5 billion in 2023, while Russian imports via Central Asian nations hit $20 billion in the first half of 2023. These figures suggest a growing role for Kyrgyzstan in Russia’s sanctioned economic strategies, facilitated by its underregulated crypto sector.

TRM Labs’ analysis warns that without stronger safeguards, Kyrgyzstan’s crypto industry could remain a persistent vector for illicit finance. The report calls for enhanced transparency measures and political will to enforce anti-money laundering frameworks, emphasizing that the country’s governance weaknesses continue to leave it “highly exposed to exploitation by corrupt actors and sanctioned entities.”

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[1] [Russian Entities Using Kyrgyzstan’s Crypto Industry to Evade Sanctions: Report] [https://decrypt.co/331819/russian-entities-using-kyrgyzstans-crypto-industry-to-evade-sanctions-report]