Officials in Kyrgyzstan have remained tight-lipped about the Grinex crypto exchange registered in the country on which $9.3bn was reportedly moved over four months using a new cryptocurrency token, A7A5, designed to enable cross-border payments that avoid Western sanctions on Russia, according to a Radio Azattyk report.

“The lack of transparency [over this exchange and cryptocurrency token] creates an ideal environment for illicit financial activity,” Aizada Abdyldaeva, a financial law expert at the Bishkek-based American University of Central Asia, was quoted as saying by the media outlet. “Kyrgyzstan risks becoming a jurisdiction of choice for organisations seeking to circumvent international controls.”

As reported in late June, fugitive Moldovan oligarch Ilan Sor and Western-sanctioned Russian defence sector bank Promsvyazbank are behind the A7A5 token, said to be the first stablecoin pegged to the Russian ruble.

Grinex trades only in A7A5 and rubles, the Financial Times found from an analysis of wallets linked to Grinex. The A7A5 token appears to facilitate large-scale financial flows into and out of Russia.

Kyrgyzstan has several times hit the headlines for sanctions-busting in Russia’s favour since Moscow launched its war on Ukraine in February 2022.

Grinex was founded just weeks after US sanctions forced the closure of Russian platform Garantex, the only exchange that supported A7A5.

Radio Azattyk said Kyrgyz authorities either promised to provide answers later or gave vague statements when asked about oversight of the Grinex exchange and its affiliates.

Kyrgyzstan's Financial Market Regulation and Supervision Service (Gosfinnadzor), which is responsible for implementing the 2022 law "On Virtual Assets," confirmed to its Kyrgyz media service that Grinex is listed on its register. A representative of the regulator reportedly said that it "will respond to media inquiries within the timeframes established by law. At this time, we are not prepared to provide comments".

Kyrgyzstan’s Finance Ministry and central bank, the National Bank of Kyrgyzstan, declined to comment, stating that the oversight of cryptocurrency exchanges is outside their purview, while the Ministry of Economy and Trade did not respond to numerous written and telephone inquiries from Radio Azattyk.

Temirlan Moldokulov, a political scientist from Bishkek, was reported as saying: "If our regulators can't tell who is moving billions through our system, how can we guarantee our foreign partners that we are not helping to circumvent sanctions?"

Civil society groups have called on Kyrgyzstan’s government to publish a full registry of virtual asset service providers and clarify the legal status of Grinex and its affiliates. “This is not just a regulatory issue, it is a national security issue,” said Aizhan Akmatova, a researcher at Bishkek-based think tank Taza Koom.