Kraken users were briefly locked out due to a dusting attack, involving sanctioned HTX funds

The cryptocurrency exchange Kraken recently temporarily locked some customer accounts due to nearly 12,000 small transfers sent from wallets marked by Arkham Intelligence as belonging to competitor HTX to Kraken-associated addresses between August 17 and 24. Each transfer ranged from a few cents to several dollars. Kraken stated that this method, known as dusting attacks, exploits the arbitrary transfer characteristics of public blockchains to associate sanctioned funds with unrelated users, thereby triggering sanction screening mechanisms.

The Kraken compliance team has restored user access while continuing to freeze the relevant sanctioned funds and cooperating with authorities to ensure the attack does not achieve its intended effect. HTX responded that an internal review found no official accounts involved in the related small transactions and is investigating whether the sending wallets were misidentified or operated by third parties. The UK sanctioned HTX in May, and the EU included it in a trading ban in July, which took effect on August 23, coinciding with the timing of the attack.