Kraken customers temporarily blocked after dust attack from HTX wallet

Crypto exchange Kraken has received a series of small crypto transfers from a wallet that Arkham Intelligence links to HTX. Between 17 and 24 August, that wallet sent nearly 12,000 tiny amounts to addresses of Kraken users, causing some of them to have their accounts temporarily blocked. Kraken calls the action a dust attack and suspects it was an attempt to cause compliance problems on other platforms.

In short:

• Nearly 12,000 small transfers from a wallet linked to HTX led to temporary account blocks at Kraken.
• Kraken describes the action as a dust attack aimed at spreading sanctioned funds.
• HTX denies responsibility and says it has launched its own investigation.

What is a dust attack?

In a dust attack, very small amounts of crypto, sometimes just a few cents, are sent to addresses of other users. The aim is usually to track those addresses or, as in this case, to trigger exchanges’ compliance systems.

Kraken said in a statement that the recent transfers from wallets linked to HTX appear to be aimed at spreading sanctioned funds to other platforms, with the goal of discrediting the broader sector. “We do not know who is behind these attacks, but they probably expect that sanctioned funds in a customer account trigger a full account block,” a Kraken spokesperson told Bloomberg.

Kraken restores access, HTX denies involvement

Arkham Intelligence identified the wallet behind the transfers as belonging to HTX, based on addresses the exchange itself published as part of its proof of reserves. Most of the transfers were worth only a few cents to a few dollars.

Kraken says its compliance team has already restored access for affected customers. The sanctioned funds are for now being held as legally required. The exchange is also working with authorities to limit the impact of the ongoing transfers.

HTX denies having initiated the transfers. The exchange says it is investigating possible incorrect address assignment or malicious activities by a third party. The case shows how difficult it is to monitor illegal money flows on blockchains, especially because users cannot always determine what is sent to their address.