Kraken Freezes Funds of 12,000 Recipients of Small Transfers from Sanctioned HTX

The American cryptocurrency exchange Kraken blocked access for a number of clients after detecting the receipt of nearly 12,000 small cryptocurrency transfers from addresses associated with the sanctioned exchange HTX. The transactions occurred between August 17 and August 24, Bloomberg reported.

After conducting an investigation, Kraken restored access to the affected accounts but seized the transferred funds and held them on the platform. The exchange did not specify the number of clients temporarily blocked, the duration of the review, or the total value of the frozen assets. Bloomberg noted that most transactions involved small amounts, consisting of only a few cents or dollars.

A blockchain transaction can be sent to a public address without the recipient’s prior consent. Users cannot prevent tokens from being received at their addresses until the exchange verifies the transaction. Kraken described the coin distribution as a “dust attack,” aimed at distributing funds from HTX addresses—sanctioned by the UK and the European Union—across unrelated addresses on other platforms to trigger mass compliance checks by those platforms. Kraken acknowledged that it has not yet determined who initiated these transactions.

Analysts at Arkham Intelligence noted that linking an address to HTX does not prove that the exchange controlled it at the time of the transactions or sent the transfers itself. HTX has firmly denied involvement in the incident. A representative of the exchange stated that HTX is conducting its own investigation into potential address labeling errors, address theft, or “malicious activity by third parties.”

Recently, a user of another American exchange, Coinbase, received a similar stablecoin transfer in USDT. The platform requested information from the client regarding the origin of the funds, threatening account suspension.