Kraken Says Some User Accounts Were Temporarily Locked After 12,000 Dust Transfers From HTX-Linked Wallets
Summary
- Kraken said some customer accounts were temporarily locked after 12,000 small crypto transfers were sent from wallets linked to HTX.
- Kraken classified the transfers as a dust attack and restored customer account access while continuing to freeze sanctioned funds.
- The exchange said the activity appears to be an attempt to spread HTX-related funds sanctioned by the U.K. and the EU to other platforms and undermine trust across the industry.
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Some customer accounts at cryptocurrency exchange Kraken were temporarily locked after thousands of small crypto transfers arrived from wallets linked to sanctioned exchange HTX.
Bloomberg reported on Aug. 25 that about 12,000 small transfers were sent from wallets identified as linked to HTX to Kraken-related addresses between Aug. 17 and Aug. 24. Most were for amounts ranging from a few cents to several dollars.
Kraken described the incident as a dust attack. The tactic involves sending tiny amounts of cryptocurrency to another wallet without consent to contaminate transaction records or disrupt tracking and compliance systems. In this case, Kraken believes the aim was to trigger the exchange's anti-money laundering procedures by causing sanctioned funds to enter customer accounts.
"A recent dust attack originating from HTX-owned wallets appears to be an attempt to spread funds sanctioned by the U.K. and the European Union to other platforms and undermine trust across the industry," a Kraken spokesperson said. The attacker may have expected entire customer accounts to be locked once sanctioned funds entered them, the spokesperson added.
Kraken said it has continued to freeze sanctioned funds in line with regulations while restoring account access for affected customers. The exchange is working with relevant authorities on additional steps to limit further harm.
HTX denied claims that it directly carried out the transfers. A spokesperson said the company is investigating the activity and that the source may have been misidentified or could reflect malicious action by a third party.
Blockchain analytics firm Arkham Intelligence classifies the wallet as linked to HTX based on an address the exchange disclosed during its proof-of-reserves process.
Andy Zhou, chief executive officer of BlockSec, said the incident was akin to poisoning a user's transaction history. Because anyone can send assets on a blockchain without permission, attackers can deliberately manipulate transaction flows at very low cost, he said.
The U.K. sanctioned HTX operator Huobi Global SA in May, saying it was part of infrastructure supporting Russia's sanctions evasion. The European Union announced related sanctions in July. Since then, major exchanges including Bybit, OKX and Binance have restricted or reviewed HTX-related transactions.
