Cryptocurrency Surge in Kyrgyzstan: $9.3 Billion Facilitates Russian Sanctions Evasion

A cryptocurrency token introduced in Kyrgyzstan to assist Russia in managing cross-border transactions and circumventing international sanctions has reportedly processed $9.3 billion in transactions within just four months, according to a Financial Times article published on Wednesday.

Launched in February, the stablecoin named A7A5 is tied to the Russian ruble and has connections to the sanctioned Moldovan businessman Ilan Şor.

Its launch coincided with the establishment of a new cryptocurrency exchange called Grinex, which facilitates trading in A7A5, Russian rubles, and Tether, a well-known stablecoin linked to the US dollar.

As per FT, there are presently 12 billion A7A5 tokens in circulation, valued at approximately $156 million.

An analysis conducted by FT on cryptocurrency wallets associated with Grinex revealed that a small cohort of users frequently executes daily transactions that often exceed the coin’s overall volume.

Overall, transactions linked to A7A5 have totaled $9.3 billion.

The token is supported by ruble deposits at Promsvyazbank, a key financier of Russia’s defense sector, which is under strict sanctions imposed by the US, UK, and EU.

A7, the organization that issued the coin, is partly owned by Ilan Şor, a Moldovan businessman convicted of embezzling $1 billion from the nation’s banking system, a scandal that nearly led to national bankruptcy. Şor acquired Russian citizenship after escaping house arrest in Moldova.

Şor is still an influential figure in Moldovan politics. Authorities in Chisinau allege that he has funded multiple political parties and engaged in vote-buying during the latest presidential election and constitutional referendum campaigns.

Şor has dismissed these allegations as an “absurd spectacle.”

He currently faces sanctions from the EU, UK, and Canada.

Cryptocurrencies have arisen as a method for Russia to evade sanctions and contend with the exclusion of Russian banks from the SWIFT financial messaging system.

Eliza Thomas, a senior investigator at the Center for Information Resilience (CIR) in London, informed FT that “Russian business leaders and government representatives have been discussing for some time the potential of using cryptocurrency for large-scale sanction evasion, particularly through the creation of their own stablecoin.”

A recent report from CIR indicated that Moscow is also leveraging A7A5 to fund political interference in other countries. The center discovered that several domains involved in such activities in Moldova shared IP addresses with A7 and A7A5 websites.

In a statement to FT, A7A5 noted that it had initially collaborated with A7’s technical team but later decided to part ways entirely due to differing developmental visions.

Bloomberg reported in January that when A7 was registered in September 2024, Şor owned a 51% share, while Promsvyazbank held 49%. The company positions itself as “a forward-thinking financial sector initiative launched by a major state bank.”

Leonid Shumakov, head of A7A5, stated to FT that Kyrgyzstan was chosen as the base because it is a “friendly jurisdiction that is not facing sanctions.”

“It’s well-known that this jurisdiction is currently providing substantial assistance in managing the pressure [Russia] is experiencing,” he added.