BISHKEK – Silence from Kyrgyz officials is adding to international concerns about alleged transactions worth billions of dollars on a cryptocurrency exchange registered in the Central Asia country.
Grinex, the platform at the center of the controversy, reportedly facilitated $9 billion in transactions between January and April this year, primarily using a ruble-pegged stablecoin (a type of cryptocurrency) known as A7A5.
These revelations, first brought to light by The Financial Times in late June, raise concerns that Grinex could be a crucial player in Russian efforts to circumvent Western sanctions imposed after Moscow launched its ongoing full-scale invasion of Ukraine in 2022.
Grinex was founded weeks after U.S. sanctions dismantled Russia’s Garantex platform, which is only sole exchange handling A7A5, considered the first stablecoin -- a cryptocurrency with an exchange rate stabilized by its ties to conventional assets such as currencies, gold, or oil -- pegged to the Russian ruble.
The similarities in how the two platforms operate, coupled with the timing of its establishment, have raised suspicions that Grinex is the successor to Garantex and provides Moscow with a digital workaround on the biting international sanctions imposed on it.
Adding to the intrigue is the involvement of Ilan Shor, a Moldovan oligarch and fugitive convicted of masterminding a $1 billion banking fraud in his home country.
Shor, now reportedly living in Russia, is suspected of having ties to both A7A5 and Grinex through a network of companies stretching from Moscow to Bishkek.
But when pressed about oversight of Grinex or its affiliated companies, Kyrgyz regulatory agencies and government ministries offered little more than deferrals and vague assurances.
No Comment
The Financial Market Regulation and Supervision Service (FMRS), responsible for implementing Kyrgyzstan’s 2022 Law on Virtual Assets, confirmed to RFE/RL’s Kyrgyz Service that a company named Grinex is listed in its registry.
However, FMRS official Chynara Baktybekova said “the listing is in Russian and may not correspond to the international Grinex exchange currently under international scrutiny.”
“We will respond to media inquiries within the timeframe prescribed by the law. We are not ready to comment at this time,” Baktybekova added.
When asked about the licensing status of Old Vector, the company behind the A7A5 token, Baktybekova stated that it is registered but does not require a full license, only a permit, as it issues tokens rather than operating an exchange.
As for A7-Kyrgyzstan, the guarantor of the A7A5 token, Baktybekova advised RFE/RL to contact a different division within FMRS.
However, repeated attempts to reach that division went unanswered.
The Ministry of Finance and the National Bank of Kyrgyzstan both declined to comment, stating that oversight of crypto exchanges falls outside their jurisdiction.
The Ministry of Economy and Commerce did not respond to multiple written and phone inquiries.
A June investigation by the Center for Information Resilience, an NGO dedicated to exposing human rights violations and threats to democracy through open source investigations and research, that the A7 strategy is aimed at "moving money across borders" and is "likely to present a significant challenge to existing sanctions regimes."
'An Ideal Environment For Illicit Activities'
The pattern of bureaucratic silence has frustrated journalists, financial analysts, and anti-corruption activists seeking clarity on how such large-scale transactions could take place in Kyrgyzstan’s nascent crypto sector.
“This lack of transparency creates an ideal environment for illicit financial activities,” cautioned Aizada Abdyldaeva, a financial law expert at the American University of Central Asia in Bishkek.
“Kyrgyzstan is at risk of becoming a preferred jurisdiction for entities seeking to evade international controls.”
Temirlan Moldokulov, a Bishkek-based political analyst, echoed those concerns:
“If our regulators can’t say who’s moving billions through our system, how can we assure foreign partners we aren’t facilitating sanction evasion?”
The Grinex controversy follows weeks of speculation about Shor’s alleged involvement with Capital Bank, one of Kyrgyzstan’s commercial banks.
Responding to those claims, President Sadyr Japarov publicly denied any foreign influence at the bank.
“Capital Bank is under state control. Don’t believe such rumors,” Japarov said in a televised interview in June. “The bank’s profits go directly to the state budget.”
While the president’s remarks addressed Capital Bank specifically, they have done little to quell unease about broader vulnerabilities in Kyrgyzstan’s financial system.
A Sanctions Backdoor?
Kyrgyzstan is one of the few Central Asian countries to have enacted a legal framework for digital assets. The 2022 law introduced a licensing regime for exchanges and token issuers, a move hailed at the time as progressive. However, critics say the framework lacks teeth.
“The law looks good on paper, but enforcement is weak and registries are secretive,” said Nurlan Aitkulov, an economist in Bishkek.
Analysts caution that this regulatory void, combined with Kyrgyzstan’s proximity to Russia and its reliance on remittances from Kyrgyz workers in Russia, could entice malicious actors to exploit the country as a financial hub for circumventing sanctions.
Western diplomats in Central Asia have privately expressed concern about Kyrgyzstan’s potential role in undermining international sanctions.
A senior European official in Brussels, speaking on condition of anonymity, told RFE/RL that “jurisdictions like Kyrgyzstan will come under increasing scrutiny.”
The U.S. Treasury’s Office of Foreign Assets Control (OFAC) has stepped up targeting of crypto-based sanction evasion networks globally.
'A Matter Of National Security'
Kyrgyzstan’s financial system is no stranger to controversy. From the collapse of banks amid political upheavals to previous allegations of money laundering through the aviation fuel sector, the country has long struggled with corruption and weak institutions.
“The crypto boom has added a new layer of complexity to an already fragile system,” said Aizada Abdyldaeva, the financial law expert.
“Without stronger oversight, we may see a repeat of past scandals—only on a digital scale.”
Civil society organizations have called on the government to publish the whole registry of virtual asset service providers and clarify the legal status of Grinex and its affiliates.
“This is not just a matter for regulators—it’s a matter of national security,” said Aijan Akmatova, a researcher with Bishkek-based think tank Taza Koom.
As international investigators dig deeper into Grinex and its network, Kyrgyzstan’s official silence is fueling speculation both domestically and abroad.
“This is a litmus test of Kyrgyzstan’s commitment to transparent governance and international collaboration,” warned Moldokulov. “The longer the silence persists, the more severe the potential repercussions could be.”
The Grinex episode has put Kyrgyzstan’s fintech ambitions at risk. If the country is perceived as a hotspot for sanctions evasion, it could face international backlash, jeopardizing its aspirations to become a regional leader in digital finance.
The story of Grinex and A7A5 continues to unfold, with journalists and blockchain intelligence firms continuing to trace the money and the networks behind it.
For Bishkek, the crossroads are clear: tighten oversight and restore trust, or risk being cast as a new epicenter in the shadowy world of financial crime.
