Cryptocurrency exchange Kraken recently experienced a series of "dust attacks" that resulted in users being temporarily locked out of their accounts after receiving tiny amounts of sanctioned digital coins. Bloomberg first reported the news, which was subsequently confirmed to Bitcoin Magazine by a Kraken spokesperson.
A dust attack involves sending minuscule quantities of cryptocurrency to numerous wallet addresses in an effort to track and de-anonymize the users. According to Kraken, the objective of these recent transactions was to trigger compliance checks by spreading sanctioned funds across other platforms, causing operational disruption for a large number of users.
Data cited from Arkham Intelligence indicated that a total of 12,000 such transfers were sent from a single wallet to addresses linked to Kraken. Arkham identified the originating wallet as belonging to HTX based on addresses the exchange previously disclosed for its proof of reserves.
HTX, a major Chinese cryptocurrency exchange formerly known as Huobi, was sanctioned by the European Union in July amid accusations that it helped Russian entities evade sanctions. Kraken stated that the dust attacks from the HTX-owned wallet appeared aimed at spreading UK- and EU-sanctioned funds to discredit the broader industry.
Despite the brief account lockouts, Kraken noted that its compliance team moved quickly to restore access while continuing to hold the sanctioned funds as required. The exchange is currently working with authorities to mitigate the impact of the attacks.
Dusting incidents have a precedent in the digital asset sector. In 2022, a similar tactic was used when funds from a Tornado Cash wallet—sanctioned by the U.S. Treasury Department—were sent to high-profile figures including comedian Jimmy Fallon, YouTuber Logan Paul, and Coinbase CEO Brian Armstrong. Federal authorities subsequently stated they would not prosecute individuals targeted by that sanctioned crypto.
