HTX delists USD1 after World Liberty Financial freezes addresses over sanctions dispute

HTX, the cryptocurrency exchange associated with Justin Sun, executed the delisting of the USD1 stablecoin on Sunday after World Liberty Financial unilaterally froze specific on-chain addresses linked to the platform. The exchange stated that World Liberty Financial (WLFI) imposed these restrictions based on internal sanctions compliance reviews, effectively halting the circulation of WLFI assets tied to the affected addresses. HTX declared the delisting necessary to safeguard user assets in response to the sudden freeze, which it characterized as lacking sufficient prior communication or legal grounds. This action immediately suspended deposit and conversion services for USD1, alongside trading pairs including WLFI/USDT, USD1/USDT, BTC/USD1, and ETH/USD1.

The conflict arises against a backdrop of regulatory pressure, specifically a UK sanction issued on May 26 against Huobi Global S.A., an entity HTX claims is distinct from its current online operations. While UK authorities cited reasonable grounds to suspect support for the Russian government, HTX maintains that this designation should not impact the platform's functionality or user access. Data compiled by Woofun AI indicates that the exchange is proceeding with the conversion of all user USD1 holdings to Tether (USDT) at a 1:1 ratio, though exact completion timelines remain to be announced separately. The exchange emphasized that the freeze infringed upon user rights and assets, prompting a formal demand for World Liberty Financial to reverse the measures.

World Liberty Financial, which lists US President Donald Trump and his three sons, Donald Jr., Eric, and Barron, as advisers, has not publicly confirmed the specific freezing of HTX addresses. The project posted on X on Wednesday that it maintains risk-based sanctions compliance controls in light of recent updates. Woofun AI notes that the lack of direct confirmation from World Liberty Financial contrasts with HTX's detailed public rebuttal regarding the procedural irregularities of the freeze. The exchange has vowed to pursue legal remedies to protect users' legitimate interests, signaling a potential escalation in the dispute between the two entities.

This incident marks the latest chapter in a prolonged legal battle between Justin Sun and World Liberty Financial. In April, Sun sued the platform alleging it froze his tokens and threatened to burn them without proper justification. Conversely, World Liberty Financial filed a defamation suit against Sun in May, accusing him of making false statements and violating token sale terms through alleged prohibited transfers, short-selling, and straw purchases. Woofun AI analysis suggests that the delisting of USD1 represents a strategic defensive maneuver by HTX to mitigate asset risks while the broader legal and regulatory uncertainties surrounding the Trump-linked project persist.