Crypto Law Brief: A Dust Attack Freezes Kraken Accounts, Roman Storm's Retrial Slides to 2027, and the SEC Reworks Custody

The past two days produced a sanctions headache nobody asked for, a criminal retrial pushed eight months back, and a rulemaking step that will eventually change how advisers hold client crypto. Here is what each means past the headline.

Twelve Thousand Tiny Transfers Locked Kraken Customers Out

Bloomberg reported on August 25 that roughly 12,000 unsolicited transfers landed on Kraken-linked addresses between August 17 and 24, most worth a few cents. Kraken called it a "dust attack" meant to scatter sanctioned funds and trip automated compliance reviews. It restricted affected customers, restored access after review, and still holds the deposits separately. Arkham labeled the sending wallet HTX-connected; HTX denies initiating anything.

The problem is structural. An address receives whatever anyone sends it, and the recipient cannot refuse. The EU transaction ban covering Huobi Global S.A. took effect August 23, mid-window. Sanctions liability generally does not require intent, which is why an exchange freezes first and investigates second. An eleven-cent deposit you never asked for can lock your balance, with no remedy but the compliance queue.

Roman Storm's Retrial Now Sits in April 2027

Judge Katherine Polk Failla adjourned the Tornado Cash developer's retrial to April 26, 2027, from October 26, while she rules on his pending motion for acquittal. His lawyers asked on August 3 for 90 days after that ruling to prepare; prosecutors opposed. The August 2025 jury convicted him on one unlicensed money transmitting conspiracy count and hung on money laundering and sanctions.

The sequencing matters more than the date. A Rule 29 motion asks whether any rational juror could have convicted on the evidence presented, a steeper climb than a new-trial motion. Grant it and the government's posture on the hung counts shifts. Deny it and Storm faces a second trial still carrying an unvacated conviction, while the question developers want answered, whether publishing non-custodial code makes you a money transmitter, stays open into 2027.

The SEC's Custody Rewrite Reaches the White House

Per a federal regulatory filing, the SEC sent a proposed rule on crypto custody by investment advisers to the Office of Management and Budget on August 25. It would clarify how advisers and investment companies can custody digital assets for clients and remove provisions the agency considers outdated.

None of this binds anyone today. OMB reviews the text, returns it, and the commissioners vote on whether to propose it, which triggers a comment period of at least 60 days and another vote before adoption. The text is not public, so the question that matters most, which assets and arrangements fall inside the framework, has no answer yet. Advisers still answer to the current custody rule and its qualified-custodian requirement.

Bitcoin Touched $81,000 and Handed It Back

BTC pushed above $81,000 overnight before sliding toward $78,000, trading near $78,500 Wednesday morning. Liquidations ran roughly $566 million in 24 hours, about $331 million of it shorts, so short covering did much of the work upward. Spot bitcoin ETFs took in $338 million on August 24, a sixth straight day of inflows, and a wallet dormant four years sold 1,400 BTC for about $111.6 million.

Cascades like this reliably generate disputes, rarely about price. They turn on execution quality, auto-deleveraging, oracle pricing, and whether the platform was reachable when a position closed, all of which your terms of service already answer.

What This Means for You

If you hold crypto on an exchange, assume an unsolicited deposit can freeze your account through no fault of your own. Keep balances you cannot afford to lose access to for a week somewhere you control, keep your own transaction records, and answer compliance requests in writing. If you trade with leverage, read the liquidation and outage terms now.

The Kraken episode shows what happens when screening treats receipt as intent. Firms should weigh value, timing, ownership, and customer behavior together, and document that reasoning as they go. Advisers have a narrower task: write down your current custody arrangement while the proposal sits at OMB, so your eventual comment reflects actual operations.

At Coin Counsel, we work with individuals and businesses navigating the legal fallout of crypto fraud — whether you're a victim seeking recovery, a company facing regulatory scrutiny, or a project working to stay compliant in an increasingly complex legal landscape. The rules are evolving fast, and the cost of getting it wrong has never been higher. Contact us at coin-counsel.com to speak with a crypto-focused attorney today.

Disclaimer

This blog post is for informational purposes only and does not constitute legal advice. Reading this content does not create an attorney-client relationship between you and Coin Counsel or Franco Law PLLC. The legal landscape surrounding cryptocurrency is rapidly evolving and varies by jurisdiction. Do not act or refrain from acting based on information in this post without first consulting a qualified attorney. If you believe you have been the victim of crypto fraud, contact us at coin-counsel.com for a consultation.