The big laundry: how crypto and Kyrgyzstan help Russia circumvent sanctions

Over the past few years, Kyrgyzstan has unexpectedly become a real cryptocurrency hub. Legal and licensed crypto exchanges have started operating in the country. GetBlock AML Research explains why Kyrgyzstan has become a center of gravity for digital assets.

Friendship of peoples

Economic cooperation between Russia and Kyrgyzstan has improved significantly in recent years. This is indicated by concrete figures:

• In 2024, bilateral trade turnover between Russia and Kyrgyzstan exceeded $3,5 billion;
• In 2024, Russian investments in Kyrgyzstan increased by 23% to reach $200 million;
• In 2023, parallel imports to Russia through Kyrgyzstan exceeded $20 billion;
• Since 2022, Chinese exports of dual-use goods (which can be used for military purposes) to Kyrgyzstan have increased by 64% to exceed $1,3 billion.

Chinese manufacturers are actively exporting semiconductors, unmanned aerial vehicles (UAVs), components for them, and anti-drone defense equipment (radars and jammers) to Russia via Kyrgyzstan and Kazakhstan.

What does crypto have to do with it?

Since 2022, cryptocurrencies and digital asset service providers (VASPs) have been legalized in Kyrgyzstan and can legally operate in the country. By the end of 2024, Kyrgyz regulatory authorities had issued licenses to 126 cryptocurrency trading platforms.

The Kyrgyz authorities are working on launching their own stablecoin, USDKG, which will be pegged to the US dollar. The development of the stablecoin is being overseen by the Kyrgyz Ministry of Finance.

According to TRM Labs, a number of cryptocurrency platforms operating legally in Kyrgyzstan show signs of being front organizations engaged in illegal activities. Some trading platforms show signs of being shell companies created to conceal financial flows originating from Russian entities subject to sanctions.

EVDE

The attention of regulators was drawn to the Kyrgyz digital asset exchange platform Envoys Vision Digital Exchange (EVDE), which managed a cryptocurrency address linked to the Russian military group “Rusich.” Members of the group participated in the conflict in Ukraine as part of the Wagner private military company, and after the latter was disbanded, they came under the jurisdiction of the Russian Ministry of Defense. Since 2022, the Rusich group, like the Wagner PMC, has been under sanctions imposed by the US Department of Justice’s Office of Foreign Assets Control (OFAC).

Garantex trail

A number of licensed crypto companies in Kyrgyzstan, following the closure of the Russian-sanctioned exchange Garantex and the seizure of more than $23 million USDT from it, completely copied the structure of the trading platform and began conducting suspicious transactions. A total of three organizations were identified as conducting operations for Garantex. There is also a clear on-chain connection between the wallets of these structures.

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Garantex’s successor, the Grinex crypto exchange and issuer of the ruble-pegged stablecoin A7A5 (Old Vector company), was also registered in Kyrgyzstan in early 2025 and received licenses to conduct activities related to digital assets. One of the first crypto exchanges to start using A7A5 in its operations, Meer, was registered on the same day as Old Vector. Meer uses the same transaction structure as Garantex.

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The transaction volume of Grinex and Meer increased significantly after the US authorities blocked Garantex wallets. This indicates that the new Kyrgyz platforms were used by Garantex beneficiaries to withdraw liquidity from compromised exchange wallets.