12,000 Small Transfers Trigger Sanctions Alarm at Kraken: Some Accounts Restricted

Kraken has temporarily restricted account access for some users following approximately 12,000 small transfers that may be linked to sanctions.

Cryptocurrency exchange Kraken has made headlines after some customers briefly lost access to their accounts following transfers ranging from a few cents to a few dollars. According to data from Arkham Intelligence, approximately 12,000 transfers were sent from wallets labeled as belonging to HTX to Kraken-linked addresses between August 17-24.

Each of the transfers ranged between a few cents and a few dollars. Kraken stated that the transactions might have been carried out with the intent of spreading sanctioned funds across different platforms and triggering account restrictions once the funds reached customer deposit addresses. In a statement shared with CoinDesk, the exchange noted that while they do not know who is behind the attacks, this could be the objective.

Small transfers locked Kraken accounts

Some Kraken users were briefly unable to access their accounts on the first day the activity was noticed. The exchange’s compliance team subsequently restored account access, but continued to hold the sanctioned funds. Kraken also announced that it is working with authorities.

This method, involving very small amounts, is known as a “dust attack.” An attacker can attempt to associate another person’s address with sanctioned funds by sending low-value assets to that address on the blockchain. Consequently, sanctions screening can turn into an access barrier for users who were not directly targeted.

Arkham classified the transfers as transactions coming from wallets associated with HTX. HTX, in its investigation, clarified that its official accounts were not responsible and suggested that the sending wallet might have been mislabeled or that a third party may have conducted the transactions. The European Union’s transaction ban on HTX came into effect on August 23.