Kraken says users received dust from sanctioned HTX wallet

Kraken said users received tiny amounts of sanctioned cryptocurrency from a wallet linked to HTX. Arkham Intelligence identified 12,000 transfers from the wallet to addresses linked to Kraken this month. Kraken described the activity as a dust attack, which sends small amounts of cryptocurrency to many wallet addresses to track and de-anonymize them. Kraken said the transactions likely aimed to spread sanctioned funds to other platforms and trigger compliance checks. Kraken said the attacks could cause full account locks and operational disruption for many users. Kraken said its customers were briefly locked out of their accounts. Kraken's compliance team restored access while continuing to hold the sanctioned funds as required. Kraken said it is working with authorities to prevent the attacks from having their intended impact. Arkham identified the wallet as linked to HTX through addresses that HTX publicly disclosed for its proof of reserves. HTX is a Chinese exchange formerly known as Huobi. The European Union sanctioned HTX in July because European authorities said it helped Russians evade sanctions. Kraken said recent dust attacks from HTX-owned wallets appeared intended to spread UK- and EU-sanctioned funds to other platforms and discredit the broader industry. Dusting has occurred for years. In 2022, a wallet linked to Tornado Cash sent Ethereum to celebrities one day after the U.S. Treasury Department sanctioned the coin-mixing application. The targeted celebrities included Jimmy Fallon, Logan Paul and Coinbase CEO Brian Armstrong. U.S. authorities said they would not prosecute the celebrities who received the sanctioned cryptocurrency.