Central Asian Crypto Boom Raises International Concerns

Kyrgyz officials' silence is fueling international concerns over alleged transactions worth billions of dollars on a cryptocurrency exchange registered in the 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, The Caspian Post reports citing foreign media.

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.