Shell firms linked to Garantex operate freely within Kyrgyz networks.
A new report from TRM Labs has revealed that Russian individuals and groups are using Kyrgyzstan’s cryptocurrency platforms to evade international sanctions. This activity has grown since Russia invaded Ukraine in 2022. As a result, Kyrgyzstan is currently regarded as one of the most important players in the process of assisting Russia to transfer money and resources beyond the scope of conventional financial activities.
First of all, such Kyrgyz-based exchanges as Grinex, Meer, and EVDE are also connected with Garantex, a Russian exchange that was prohibited and was out of operation. These exchange sites are assisting in the conversion of Russian rubles into cryptocurrency through stablecoins, such as A7A5. This allows the Russian entities to easily avoid restrictions imposed by Western countries.
Furthermore, TRM Labs found that not all Kyrgyz exchanges behave like Garantex on the blockchain. For example, Grinex started allowing crypto withdrawals in the A7A5 stablecoin just days after Garantex closed in March 2025. This sudden move raised serious questions. It suggests that both platforms may be run by the same people. Additionally, several exchanges share addresses, founders, and contact numbers. This overlap is suspicious. As a result, experts believe some of these companies are shell firms.
Also, the Kyrgyz legislation permits foreigners to officially register Virtual Asset Service Providers (VASPs) without visiting the country. The absence of such legislation has turned Kyrgyzstan into a prospective place where Russian players can establish crypto services fast and unnoticeably.
At the same time, Russia has also increased its financial relations with Kyrgyzstan. By 2024, bilateral trade had increased to 3.5 billion, whereas Russian investment had increased by 23 percent early in 2024. The export of drones, semiconductors, and anti-UAV equipment is already a common shipment through Kyrgyzstan, often after having been exported out of China. The Chinese exports of these dual-use goods to Kyrgyzstan and Kazakhstan grew by 64 percent between 2022 and 2023 to hit 1.3 billion.
Meanwhile, TRM Labs said that certain Chinese suppliers are freely ready to export military-use goods to Russia. Such goods are mostly channeled through Kyrgyzstan to conceal their destination. This tendency contributes to the increasing fears that Kyrgyzstan is not only a place where money is transferred, but also where sensitive technology is transferred to Moscow.
The crypto friendly laws of Kyrgyzstan have simply added salt to injury. In 2022, a law recognised virtual assets and established a licensing framework of crypto companies. Although this was a regulation to facilitate innovation, it has now been misused by foreign agents in dishonest activities.
In the future, analysts say that unless Kyrgyz authorities move swiftly, this model would extend to other nations in the region. Western leaders are calling governments to increase collaboration with Kyrgyzstan to deal with such dangers.
Finally, the TRM Labs report highlights how Russia is using the Kyrgyz crypto sector to bypass international sanctions and fund its war. As a result, this activity poses a serious threat to global financial security. Moreover, the report calls for stronger enforcement measures to disrupt these illicit channels. In addition, greater transparency across regional exchanges is essential. Therefore, international cooperation is urgently needed to close loopholes and ensure global stability.
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