The booming crypto market in Kyrgyzstan has recently come under scrutiny for potentially being used as a backdoor for moving funds by Russian networks. A new report from TRM Labs sheds light on how Kyrgyz-registered exchanges are allegedly helping Russian entities evade sanctions through the crypto industry.
Kyrgyzstan’s crypto industry has experienced exponential growth since the implementation of its “On Virtual Assets” law in 2022. The country has issued over 120 virtual asset service provider licenses, with transactions totaling $4.2 billion in the first seven months of 2024. However, the lack of stringent oversight has made it an attractive hub for entities looking to bypass sanctions.
TRM Labs specifically highlights two crypto exchanges, Grinex and Meer, which emerged in Kyrgyzstan following the disruption of Russia’s Garantex in March 2025. These exchanges are suspected to be successors to Garantex and have been facilitating fund movement for Russian users through A7A5, a stablecoin tied to the Russian ruble that has raised concerns in the past.
On-chain analysis revealed that both Grinex and Meer share similarities in wallet infrastructure and transaction patterns with Garantex, indicating a potential connection. Additionally, Envoys Vision Digital Exchange (EVDE) was found to have links to wallets associated with the Rusich Group, a sanctioned Russian paramilitary organization. These exchanges also exhibit characteristics of shell companies, such as shared founders and registration addresses, suggesting possible illicit activities.
The A7A5 stablecoin, which has been quietly moving billions since its launch, has ties to sanctioned entities, raising suspicions of its role in facilitating cross-border payments for Russian entities. If these activities are not addressed, they could potentially spread to neighboring countries like Kazakhstan and Uzbekistan, which are also adopting crypto-friendly regulations, undermining international sanctions.
TRM Labs emphasizes the importance of tightening controls on VASP registrations, enforcing clearer ownership rules, and conducting thorough checks on shell companies to prevent further exploitation of Kyrgyzstan’s crypto infrastructure by Russian financial networks. Failure to address these vulnerabilities could have far-reaching consequences for the region and beyond.