Kyrgyz silence raises alarms over crypto exchange Grinex and potential sanctions evasion

Kyrgyzstan has been facing international scrutiny due to a cryptocurrency exchange named Grinex, which has allegedly facilitated billions of dollars in transactions. The platform was established shortly after U.S. sanctions targeted Garantex, the only Russian exchange that was managing a stablecoin known as A7A5, tied to the Russian ruble. The timing and operational similarities between Garantex and Grinex have led to suspicions that Grinex might be a means for Moscow to circumvent these sanctions. Concerns were amplified by the silence from Kyrgyz officials when inquiries were made about the exchange's operations and regulatory status. Chynara Baktybekova, an official with the Financial Market Regulation and Supervision Service (FMRS), addressed some concerns but noted that inquiries related to Grinex would be responded to within legal timeframes. Topics like the licensing of Old Vector, which issues the A7A5 token, have drawn scrutiny as Baktybekova indicated that only a permit is required for token issuance, indicating a lax regulatory framework. Analysts fear that these circumstances may enable illicit financial transactions, especially given Kyrgyzstan's historical issues with corruption and poor oversight. Previous investigations highlighted that the A7 strategy could significantly challenge existing sanctions as it aids in moving money across borders. Financial experts have voiced their concerns that the lack of transparency in Kyrgyzstan’s regulatory environment presents an ideal setting for potential illicit activities. Given the regime's struggle against corruption in banking and finance, calls have been made for stronger oversight mechanisms to mitigate risks in the rapidly evolving digital asset landscape. The Kyrgyz financial sector has a long history of corruption, including previous accusations involving money laundering linked to the aviation fuel industry. The current situation with Grinex has sparked debate about the effectiveness of existing regulations and the need for systemic changes within the financial system to prevent future scandals—especially those that may exploit digital platforms. Civil organizations have urged the Kyrgyz government to clarify the legal status of cryptocurrency services operating within the country.