Key Highlights
- Kraken said some customers were temporarily restricted after receiving small transfers from an HTX-linked wallet.
- Nearly 12,000 transfers reached Kraken-linked addresses between August 17 and August 24.
- Kraken described the activity as a possible “dust attack” involving sanctioned funds.
Crypto exchange Kraken said some customers were temporarily unable to access their accounts after receiving small cryptocurrency transfers from a wallet identified as linked to HTX.
According to a Bloomberg report published on Tuesday, nearly 12,000 transfers were sent to Kraken-linked addresses between August 17 and August 24, with most involving amounts worth only a few cents or dollars. Kraken described the activity as a possible “dust attack” involving sanctioned funds. HTX denied initiating the transfers and said it was investigating what happened.
CryptoTimes has reached out to Kraken for comment but hasn’t received a response at the time of publication.
Kraken reviews accounts after transfers
Kraken said its compliance team temporarily restricted some accounts after the transactions were identified. The exchange said the restrictions were related to reviews of the funds and that affected customers later regained access while Kraken continued handling the assets under applicable sanctions requirements.
A Kraken spokesperson said, “Recent dust attacks from HTX-owned wallets appear to be an attempt to spread UK- and EU-sanctioned funds to other platforms to discredit the broader industry.”
Kraken said it could not determine who was responsible for the transfers but believed the activity may have been intended to trigger compliance procedures at other platforms.
That remains Kraken’s assessment and does not establish who initiated the transactions.
HTX denies sending the funds
HTX disputed Kraken’s characterization of the transfers. An HTX representative said the exchange had reviewed the matter and “absolutely did not engage in such behaviour.” The company said the activity could have resulted from an operational misunderstanding or interference by a third party and said it was investigating the source.
Blockchain analytics firm Arkham Intelligence identified the wallet as linked to HTX based on addresses previously disclosed by the exchange in connection with its proof-of-reserves information.
However, identifying a wallet as associated with an exchange does not independently establish who controlled it when the transfers occurred.
The origin and purpose of the transactions therefore remain unresolved.
Earlier HTX-linked transfers
The latest incident follows other reports of small transfers involving HTX-linked wallets.
On August 18, CryptoTimes reported that unsolicited HTX-linked transfers had resulted in account restrictions at Binance and other exchanges. HTX denied deliberately sending the funds and cited the possibility of a misunderstanding or third-party interference.
On August 20, another case involved 166 small USDT outflows from an HTX hot wallet. Blockchain analysis identified 15 receiving addresses linked to Kraken, while approximately $4.2 million in related funds were frozen by the exchange.
The incidents involved a similar issue: exchanges may need to review transactions associated with sanctioned or high-risk addresses even when the recipient did not knowingly initiate the transfer.
HTX changes withdrawal addresses
The transfers were also reported around the time HTX changed part of its withdrawal infrastructure.
On August 21, HTX said it would begin rotating withdrawal addresses and distributing hot-wallet funds across multiple wallets.
The changes came as transactions involving HTX-linked addresses received increased scrutiny from blockchain analysts and crypto exchanges. The new setup is separate from the question of who initiated the transfers to Kraken-linked addresses.
Why unsolicited transfers can trigger reviews
Public blockchains generally allow anyone controlling an address to send assets to another address without the recipient approving the transaction.
This creates a compliance issue for exchanges because a customer can receive funds from an address they have never interacted with. If the sending address is associated with a sanctioned entity, the transaction may still trigger automated monitoring or a manual review.
That can temporarily affect an account while the exchange determines the source of the funds and whether the customer had any involvement in the transaction.
Andy Zhou, CEO of blockchain security firm BlockSec, described the practice as a form of transaction-history “poisoning,” in which an outside party adds unwanted activity to another wallet’s record.
Not the same as traditional dusting
Traditional dusting attacks typically involve sending very small amounts of cryptocurrency to wallets in an effort to track activity or manipulate transaction-history records.
The concern in the Kraken case is different because the reported transfers are primarily being examined from a sanctions and compliance perspective.
The recipient does not necessarily have control over whether the funds arrive, but the transaction can still create an association that an exchange’s monitoring systems need to investigate.
HTX faces sanctions-related scrutiny
The incident comes as HTX-linked entities face sanctions-related scrutiny.
The United Kingdom sanctioned Huobi Global SA, the Panama-based company operating HTX, in May under its Russia sanctions regime. British authorities alleged that the company was connected to infrastructure used to help Russia evade sanctions.
The European Union later announced sanctions involving HTX-linked entities in July.
Those measures increase the compliance significance of transactions involving wallets associated with HTX. However, the existence of sanctions against an entity does not by itself establish that every transaction involving an associated wallet was intentionally conducted for sanctions evasion.
What remains unclear
Kraken and HTX have provided different accounts of the transactions, while blockchain data shows that the transfers occurred between the identified addresses. The main unresolved issue is who initiated the transfers and why.
For Kraken, the transactions resulted in account reviews because of the connection to a wallet identified as HTX-linked. HTX, meanwhile, has denied deliberately sending the funds.
The incident highlights a practical issue for exchanges: customers can receive blockchain assets without approving the transaction, while platforms may still have to investigate those transfers when they involve sanctioned or otherwise restricted addresses.
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