Crypto platform HTX said it will remove the USD1 stablecoin issued by World Liberty Financial (WLFI) and convert eligible holdings into Tether’s USDT at a 1:1 ratio on June 7 at 03:00 UTC. The decision follows WLFI’s move to freeze HTX-related onchain addresses, citing sanctions compliance.
Trading in WLFI/USDT, USD1/USDT, BTC/USD1, and ETH/USD1 pairs had already been suspended on June 5. HTX linked both the suspension and delisting directly to the address freeze, which it said was carried out without prior consultation.
Dispute over frozen funds
WLFI, which manages both the WLFI governance token and the USD1 stablecoin, said the action was part of ongoing sanctions compliance reviews but provided no details on the entities or criteria involved.
An HTX spokesperson said the frozen balances belong to ordinary platform traders rather than sanctioned parties. The platform has asked WLFI to lift restrictions on the affected accounts.
Sanctions backdrop intensifies tensions
The situation escalated after the United Kingdom sanctioned Huobi Global S.A. on May 26, alleging it facilitated more than $1.5 billion in transfers linked to Russian sanctions evasion through a network that included Garantex. HTX said the sanctioned entity operates independently and that the action does not affect its current operations or users.
Pattern of onchain intervention
This marks the second known use of WLFI’s onchain freeze mechanism. In September 2025, wallets linked to Tron founder Justin Sun were blocked after he moved about $9 million in WLFI tokens between HTX-associated accounts. Sun later filed legal action, arguing the token’s contracts allow unilateral freezes without holder consent.
WLFI has not commented specifically on the HTX case. In a June 3 social media post, it reiterated that it enforces sanctions controls and may block transactions tied to restricted entities.
Operational risks come into focus
The incident highlights a key risk in stablecoins where issuers can freeze assets without warning, effectively making funds inaccessible regardless of ownership. It also shows how exchanges can intervene by converting affected balances to maintain liquidity, even if it alters trader holdings without direct consent.
At the same time, regulatory enforcement is increasingly reaching into onchain activity, meaning actions in one jurisdiction can quickly impact users globally.
Despite the dispute, HTX reported strong growth, with its user base exceeding 59 million by March 2026 and total 2025 trading volume reaching about $3.3 trillion. The stablecoin market has also expanded, surpassing $320 billion in April 2026, with USDT accounting for nearly 60% of the total supply.
Concerned about stablecoin risks and sanctions fallout? Deepen your insight with this stablecoin regulation explainer today.
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