In brief
- Kyrgyzstan’s President has appealed to UK and U.S. leaders over UK sanctions imposed on Kyrgyz crypto networks linked to the rouble-pegged stablecoin A7A5.
- The country has rapidly emerged as a hub for Russian trade and crypto flows since the invasion of Ukraine.
- Analysts say Kyrgyzstan-based exchanges Grinex and Meer show signs of being successors to sanctioned Russian exchange Garantex.
Kyrgyz President Sadyr Japarov on Thursday appealed to the leaders of the U.S. and UK, after the UK imposed sanctions on Kyrgyz crypto networks it said were being used by Russia to evade Western restrictions.
The UK on Wednesday targeted eight individuals and entities, including four Kyrgyz firms, accused of facilitating sanctions evasion through cryptocurrency transactions.
“There is no need to politicize the economy,” Japarov told state news agency Kabar.
Kyrgyzstan’s role in Russia’s sanctions evasion strategy has become more important over the past few years. Since Moscow’s invasion of Ukraine in 2022, the country has become a key transit hub for Russian trade and parallel imports—bilateral trade hit $3.5 billion in 2024 and Russian investment in Kyrgyzstan increased nearly a quarter—while dual-use goods exports from China to Kyrgyzstan and Kazakhstan climbed 64% in a year.
At the same time, Kyrgyzstan started to develop its crypto sector. Earlier this year, it named Binance founder and former CEO Changpeng “CZ” Zhao as an advisor on digital assets, and as of late 2024 had issued well over 100 VASP licenses. But it has also become increasingly associated with illicit Russian financial flows.
Sanctions target A7A5 stablecoin
The sanctions hit Luxembourg-based and Kyrgyz entities including crypto exchanges Meer and Grinex, linking them to A7A5, a rouble-pegged stablecoin launched in Kyrgyzstan and available on the Tron and Ethereum blockchains. The UK said that A7A5 had moved $9.3 billion in just four months.
Grinex, which TRM Labs analysts said in July may be a rebranded successor to Russia’s sanctioned Garantex exchange, began offering withdrawals in A7A5 weeks after law enforcement disrupted Garantex in March.
TRM Labs has tracked how Kyrgyz-registered exchanges such as Grinex and Meer exhibit the same on-chain patterns as Garantex, suggesting coordination within Russia’s illicit finance ecosystem. Many of these Kyrgyz platforms, it noted, reuse the same addresses, founders and contact details, raising suspicions they are shell companies.
“It’s great to see the UK taking decisive action against the entities yesterday ,which have been linked to Russian sanctions evasion for some time,” Isabella Chase, head of policy, EMEA at TRM Labs, told Decrypt.
“These sanctions will make it more difficult for these entities to operate and will be noted in the EU and US.”
Western officials additionally say the A7A5 token, along with Kyrgyz-registered exchanges Grinex and Meer, were designed to sidestep sanctions and funnel billions back to Moscow.
“If the Kremlin thinks they can hide their desperate attempts to soften the blow of our sanctions by laundering transactions through dodgy crypto networks – they are sorely mistaken,” said UK sanctions minister Stephen Doughty in a statement.
“These sanctions keep up the pressure on Putin at a critical time and crack down on the illicit networks being used to funnel money into his war chest.”
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