Kraken said wallets linked to sanctioned exchange HTX sent roughly 12,000 small crypto transfers to Kraken-related addresses between Aug. 17 and Aug. 24, a wave of deposits that triggered the exchange’s sanctions screening and briefly locked some customers out of their accounts. Bloomberg first reported the episode on Tuesday, citing Arkham data.
According to Bloomberg, which cited data from Arkham Intelligence, most of the transfers were worth between a few cents and several dollars.
Kraken called the activity a dust attack
Kraken reportedly described the transfers as a “dust attack,” a tactic that involves sending tiny amounts of crypto to a large number of addresses. A Kraken spokesperson told Bitcoin Magazine that the exchange does not know who was behind the transfers, but said the sender likely expected sanctioned funds landing in a client account to trigger a full account lock and create operational disruption for a large number of users.
The spokesperson said Kraken’s compliance team restored access quickly while continuing to hold the sanctioned funds as required. Kraken also said it is working with authorities.
Permissionless transfers can turn screening systems into a target
Blockchain transfers do not require the recipient’s permission. That means anyone holding sanctioned assets can send them to a stranger’s deposit address and force the receiving platform to respond. In the account provided by the report, this makes automated screening an attack surface: if compliance rules treat any contact with a sanctioned address as meaningful exposure, those rules can be abused at low cost.
Transfers spanned the date HTX became restricted in Europe
The transfers overlapped with the date HTX became off-limits in Europe. The European Union adopted its 21st Russia sanctions package on July 23, listing HTX — identified in the regulation as Huobi Global SA — among third-country crypto service providers accused of frustrating existing restrictions. The transaction ban took effect on Aug. 23.
Binance stopped processing transactions involving HTX and 10 other listed platforms on the same date.
HTX disputed the attribution
HTX challenged the attribution. A spokesperson reportedly said the exchange is investigating and that the source of the transfers may have been misidentified or may reflect malicious action by a third party.
Separately, the UK sanctioned Huobi Global S.A. in May over alleged Russia ties. After that move, HTX said the entity was distinct from the trading platform. TRM Labs has said HTX rotated hot wallets and funding addresses following the UK action.