Kraken temporarily froze some customer accounts after nearly 12,000 tiny crypto transfers from a wallet associated with HTX reached Kraken-linked addresses between Aug. 17 and Aug. 24, in what the exchange described as a dust attack aimed at weaponizing sanctions screening.
The transfers, mostly worth a few cents to several dollars, triggered compliance reviews after Arkham Intelligence linked the sending wallet to HTX through an address previously disclosed during the exchange’s proof-of-reserves process. While most affected users have had account access restored, funds identified as sanctioned remain frozen, and Kraken said it is working with relevant authorities to limit further disruption.
HTX has denied initiating the transfers and said it is investigating whether the wallet was misattributed or controlled by a malicious third party. The incident follows U.K. sanctions on Huobi Global SA in May and related EU measures in July, which increased compliance sensitivity around HTX-linked transactions.
The episode highlights how permissionless blockchain transactions can be used to contaminate legitimate exchange addresses, forcing platforms to distinguish between intentional economic activity and unsolicited exposure to sanctioned funds.
