New cryptocurrency from Kyrgyzstan helps Kremlin circumvent sanctions

This is according to an investigation by the Financial Times.

The token in question is A7A5, which is positioned as the first stablecoin pegged to the russian rouble. It was launched in February in Kyrgyzstan. Its purpose is to simplify large financial flows to and from russia, which are complicated by Western restrictions.

According to the FT, $9.3 billion in A7A5 tokens passed through wallets linked to the new Grinex exchange, which trades exclusively in A7A5, rubles and a stablecoin pegged to the dollar. A7A5 claims that each token is backed by rouble deposits at Promsvyazbank, a state-owned defence sector bank subject to US, EU and UK sanctions.

There are currently 12 billion A7A5 tokens in circulation, worth $156 million. The coin is used by a relatively small circle of users, but the volume of daily transfers exceeds this amount several times over.

As the Centre for Information Resilience (CIR), a British non-profit research organisation, has found, A7A5 may also be linked to Russian political influence campaigns abroad. A7, the company that originally launched the token, is now under British sanctions.

According to russian records, most of its shares are owned by Moldovan oligarch Ilan Shor. He was convicted of the largest bank fraud in Moldovan history (the theft of $1 billion), after which he fled to russia and obtained citizenship.

Last year, Shor was accused in Moldova of mass voter bribery — he called the charges an ‘absurd spectacle.’ CIR also found that a number of websites linked to politically influential operations in Moldova used the same IP address as the A7 and A7A5 websites.

A7A5 stated that it had initially cooperated with A7 but had ‘completely severed ties’ last month due to differences in development strategy.

The creation of A7A5 coincided with increased scrutiny of russia-related operations and the disconnection of certain russian banks from the SWIFT system. According to Leonid Shumakov, director of A7A5, Kyrgyzstan was chosen because of its ‘friendly jurisdiction, which is less vulnerable to sanctions.’

Users in russia can purchase A7A5 through the Tron or Ethereum blockchains, then exchange it for USDT (a stablecoin pegged to the dollar) and withdraw funds in the desired country or currency. A7A5 is positioned as a ‘bridge’ to USDT for russian importers.

The company claims that for each token purchased, a rouble deposit is made to Promsvyazbank, which allegedly guarantees stability for users. According to the company, the existence of reserves is confirmed by an independent audit from Kyrgyzstan.

Source: Економічна правда, Financial Times