Kraken customers were locked out of their accounts after receiving tiny amounts of sanctioned cryptocurrency from a wallet linked to HTX, the Chinese crypto exchange formerly known as Huobi, according to reporting from Bitcoin Magazine and Bloomberg on August 25, 2026.
Between 12,000 transfers were sent from an HTX-owned wallet to addresses linked to Kraken during August, according to blockchain analysis firm Arkham Intelligence, which identified the wallet based on addresses HTX has publicly disclosed as part of its proof of reserves. The European Union sanctioned HTX in July because it has helped Russians evade sanctions, according to European authorities.
A dust attack involves sending small quantities of cryptocurrency to numerous wallet addresses, typically to track and de-anonymize them. In this case, the sanctioned funds triggered Kraken’s compliance systems to lock affected customer accounts.
“We don’t know who is behind these attacks, but they likely expect that if sanctioned funds land in a client account, it triggers a full account lock, causing operational disruption for a large number of users,” a Kraken spokesperson said.
Kraken’s compliance team mobilized quickly to restore customer access while continuing to hold the sanctioned funds as required by law. The exchange did not specify how many accounts were locked or the total value of sanctioned crypto transferred.
Pattern from 2022 Dust Attack
The HTX dust attack mirrors a 2022 incident involving sanctioned Ethereum from a Tornado Cash wallet. One day after the U.S. Treasury Department sanctioned Tornado Cash, someone sent sanctioned crypto to celebrities including Jimmy Fallon, Logan Paul, and Brian Armstrong, the Coinbase CEO. The federal government said it would not prosecute the recipients.
“Recent dust attacks from HTX-owned wallets appear to be an attempt to spread UK- and EU-sanctioned funds to other platforms in order to discredit the broader industry,” the Kraken spokesperson said.
Kraken added that it is working with authorities to prevent the attacks from achieving their intended impact. The source did not identify who orchestrated the transfers or clarify whether the 12,000 transfers targeted only Kraken or other platforms as well.
