Kraken Blocks Accounts Amid 'Dust Attack' Over Sanctioned Funds

Kraken temporarily locked thousands of customer accounts after detecting a series of tiny, unwanted cryptocurrency transfers from a wallet linked to HTX. The exchange calls this a 'dust attack,' where attackers attempt to spread sanctioned funds across multiple platforms.

The small amounts transferred, typically just cents or dollars, don't raise suspicion on their own, but the source of these funds is what matters. Between August 17 and 24, nearly 12,000 transfers flowed from a wallet tied to HTX, which has been under regulatory scrutiny for allegedly helping Russia evade sanctions.

Kraken's compliance team swiftly responded by locking affected accounts while they investigated. In an attempt to discredit the industry, attackers likely expected account locks when these sanctioned funds landed in customer wallets.