Crypto exchange HTX has announced its intention to delist the stablecoin USD1, issued by World Liberty Financial (WLFI). The exchange will facilitate the conversion of eligible user holdings to Tether’s USDT on a 1:1 basis. This action stems from a dispute where WLFI reportedly froze certain HTX-linked on-chain addresses, citing sanctions compliance. HTX has publicly called for WLFI to unfreeze these user assets, asserting that the unilateral freezing action infringes upon user rights.
Key Takeaways
- HTX will delist the USD1 stablecoin and convert user holdings to USDT.
- The delisting follows WLFI’s alleged freezing of specific HTX on-chain addresses.
- HTX claims the frozen assets belong to individual users and were not associated with sanctioned entities.
- WLFI’s actions are linked to sanctions compliance reviews, following a UK designation against Huobi Global S.A.
- This incident involves a prior dispute between WLFI and Tron founder Justin Sun regarding asset freezing.
The delisting is scheduled to take effect on June 7th at 3:00 UTC. HTX had previously suspended trading pairs involving USD1, including WLFI/USDT, USD1/USDT, BTC/USD1, and ETH/USD1, starting June 5th.
According to HTX’s statement, the World Liberty Financial project team, responsible for the WLFI governance token and the USD1 stablecoin, acted unilaterally in freezing specific HTX on-chain addresses. HTX contends that this action was taken without sufficient prior communication, adequate contractual or legal justification, transparent disclosure, or adherence to due process, thereby violating the rights of its users concerning their assets.
A spokesperson for HTX clarified that the frozen assets do not belong to any sanctioned entity but are instead legally owned by individual users. The exchange is urging WLFI to promptly release these assets.
The context for WLFI’s actions appears to be related to recent regulatory scrutiny. The UK designated Huobi Global S.A. on May 26th, alleging the entity facilitated over $1.5 billion in transactions to circumvent Russian sanctions, reportedly through the A7 network and the Russia-linked Garantex exchange. HTX asserts that the sanctioned entity, Huobi Global S.A., is separate from the online HTX platform and that the UK’s designation does not affect its operations or user funds.
This situation is not the first instance of WLFI utilizing its on-chain freeze capability. In September 2025, the project froze assets in a wallet associated with Tron founder Justin Sun after he transferred approximately $9 million of WLFI, with some of these funds passing through HTX. Mr. Sun has since initiated legal proceedings against the WLFI project, alleging the existence of a hidden backdoor in its smart contract that allows the team to freeze investor tokens without prior notice or consent.
World Liberty Financial has not issued a public statement specifically addressing the freeze of HTX addresses. However, on June 3rd, the project posted a general notice reminding users of its commitment to sanctions compliance and its ability to block transactions involving sanctioned entities, without naming any specific counterparties.
The World Liberty Financial team did not immediately respond to inquiries for comment from The Block.
Potential Regulatory Precedent
This ongoing dispute between HTX and World Liberty Financial highlights critical legal and regulatory challenges within the digital asset space. The ability of a stablecoin issuer to unilaterally freeze addresses on a centralized exchange, even if based on alleged sanctions compliance, raises significant questions about asset ownership, due process, and the jurisdictional reach of regulatory actions. The UK’s designation of Huobi Global S.A. further underscores the increasing global focus on compliance and the potential consequences for entities deemed to be facilitating sanctions evasion. Should similar disputes arise and lead to established legal precedents, it could significantly influence how stablecoins operate, how exchanges handle user assets in response to external directives, and the extent to which decentralized technologies can be effectively controlled through traditional regulatory frameworks. The situation also brings into sharp focus the complexities of defining distinct legal entities within the global crypto landscape and the impact of international sanctions on digital asset platforms.
Source: : www.theblock.co