Recent moves by cryptocurrency exchange HTX could soften the blow of new sanctions on the firm, experts warn, including a European Union ban on transactions.
One of the world’s largest crypto exchanges, HTX is closely associated with the crypto billionaire Justin Sun, who was a primary booster of the Trump family’s digital currency business before the relationship recently soured. The European Union last week included the exchange in a roster of 18 firms allegedly involved in Russia’s vast crypto ecosystem, which the country has used to evade Western sanctions aimed at pressuring Russia to end its war in Ukraine.
HTX did not respond to repeated requests to comment on this story, but the exchange recently told Bloomberg News that regulatory compliance is “our absolute top priority.”
Reporting from the International Consortium of Investigative Journalists’ Coin Laundry investigation, which explored illicit uses of cryptocurrency, found accounts at HTX, previously called Huobi, tied to accused Russian money launderers and to an organization known for funding Russian military entities.
The E.U.’s move comes roughly two months after the United Kingdom sanctioned HTX in an action taking on entities alleged to have supported Russia’s “dark networks and shadow financial systems.” Crypto news sites have quoted HTX as saying the U.K. sanctions amount to a misunderstanding that the firm is working with relevant authorities to resolve.
According to multiple experts who spoke to ICIJ, HTX appears to have responded to the U.K. sanctions by implementing complex maneuvers that make its financial activities harder to track, which could make enforcing the E.U.’s new sanctions difficult.
Major cryptocurrency exchanges use large-volume crypto wallets as centralized points to manage customer funds, take in deposits and pay out withdrawals. Analysts keep tabs on these central accounts as key signposts to help track money flows of exchanges and their customers. Cryptocurrency wallet addresses are often functionally anonymous until analysts can determine their ownership.
But after first coming under sanctions two months ago, HTX has begun rapidly generating hundreds of fresh central accounts, shifting its activity from wallets known to be controlled by the firm to the newer, unknown accounts, experts tell ICIJ.
That’s making it harder for investigators and compliance officials to keep track of HTX’s money flows, experts say.
Blockchain analysts around the world tell ICIJ that they’re now racing to continually identify HTX’s new central wallet addresses. According to Vladyslav Kychkyruk, Head of Research at crypto-tracing firm Global Ledger, in the two months after the U.K. sanctioned HTX, his firm saw a dramatic spike in the number of central wallets it identified HTX as using: rising from just 32 central accounts prior to its U.K. sanctioning to more than 750 accounts on the Tron blockchain alone.
“It makes investigations by law enforcement agencies and regulators into HTX as a platform more difficult,” Kychkyruk told ICIJ. In a 24-hour span earlier this week, he said, HTX generated a dozen of these central wallets.
“This pattern is unlike any other major peer of HTX,” said Nick Smart of blockchain analytics firm Crystal Intelligence. “Coinbase, Kraken, Binance, OKX and others do not change wallet transfer patterns in such an aggressive manner.”
HTX did not respond to questions about this assessment.
Smart says that cryptocurrency can lend itself to obfuscation.
“Cryptocurrency as a technology makes this process quite simple,” Smart said. “New wallet addresses are trivial to make thousands of, even by a lay user.”
Prior to current concerns over HTX, other elements of the firm had confounded lawyers representing scam victims and law enforcement officers, who said they struggled to get cooperation from the exchange. Some said they had difficulty finding a way to contact HTX or even to learn where the company was based.
Formerly known as Huobi, HTX changed its name in 2023, shuttered its Seychelles operations and didn’t publicly disclose the location of its new headquarters, ICIJ previously reported. Court filings in the U.K. state that a company associated with HTX is registered in Panama.
HTX did not respond to a question from ICIJ asking where it is now based.
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