Crypto exchange HTX will permanently remove President Donald Trump-backed World Liberty Financial’s USD1 stablecoin from its trading platform.
Starting June 7, the digital asset exchange said it will systematically convert all eligible retail customer balances of the USD1 token into Tether (USDT) at a strict one-for-one valuation.
This intervention comes in direct retaliation after the Trump-affiliated decentralized finance project blocked access to several HTX-controlled blockchain addresses.
The trading platform’s management emphasizes that the blocked portfolios contain standard private client funds rather than illegal capital, and considers the freeze a violation of users’ property rights.
The exchange added:
“As the USD1 stablecoin is also issued by the WLFI project team, HTX has proactively suspended trading in the trading pairs WLFI/USDT, USD1/USDT, BTC/USD1 and ETH/USD1 from June 5, 2026 at 1:00 PM (UTC) to protect users’ assets, maintain market fairness and mitigate potential systemic risks.”
The standoff spotlights an intensifying conflict between offshore cryptocurrency platforms and US-affiliated stablecoin issuers seeking to rigorously enforce international sanctions at the protocol level.
The British Sanctions Catalyst
The origins of the rift date back to late May, when British authorities targeted the digital asset infrastructure that enabled Russian financial evasion.
On May 26, the British Foreign, Commonwealth, and Development Office said imposed strict sanctions against Huobi Global SA, a Panamanian business entity. British regulators alleged that the company helped process around $1.5 billion in illegal volumes linked to the A7 payment network and Garantex, a heavily sanctioned Russian cryptocurrency exchange.
World Liberty Financial, which operates both the USD1 stablecoin and the companion WLFI governance token, has apparently initiated the wallet freeze in order to strictly comply with the newly issued UK restrictions.
Although the project omitted any specific mention of HTX in its public communications, it created a broad market advisory reminding counterparties of its robust compliance protocols and its technical ability to cut ties with restricted networks.
However, HTX has strongly rejected the principle underlying the asset freeze.
The exchange’s representatives claim that today’s digital asset platform operates completely independently of Huobi Global SA, the specific legacy entity mentioned in the UK government’s sweeping designations in May.
In aggressive public statements, HTX officials characterized the World Liberty team’s actions as a massive overreach that ignored basic legal frameworks, transparent disclosure and standard industry communications.
Molly Fu, a spokesperson for the exchange, clarified that the locked capital belongs exclusively to ordinary private buyers and is not related to sanctioned actors.
The platform has continued to demand an immediate reversal of blockchain-level restrictions, warning that treating customer assets as collateral damage sets a dangerous precedent for the broader digital economy.
WLFI takes priority over token locking
World Liberty Financial’s willingness to lock wallets via smart contract features is not unprecedented, although the mechanism’s deployment against an institutional exchange marks a significant escalation in its compliance strategy.
The project, which was launched in late 2024 by members of the Trump family, uses an architecture that allows administrators to unilaterally halt the transfer of tokens.
The most prominent previous application of this sweeping authority involved Justin Sun, the billionaire founder of the Tron blockchain network and a global advisor to HTX.
Notably, the legal hostilities between the Trump-backed company and Sun predate the current currency crisis.
The conflict first became public when World Liberty filed a high-profile lawsuit against Sun in Florida state court. The lawsuit alleged that the entrepreneur violated early investor agreements, engaged in unauthorized short sales to depress the market price of the token, and conducted prohibited straw purchases.
According to the company’s legal documents, the first freezes on Sun’s personal assets in September 2025 were necessary measures to protect the token ecosystem from market manipulation.
However, Sun rejected these allegations, claiming that he had been unfairly deprived of his voting rights on the board. He also argued that punishing deviant token holders was against the fundamental principles of decentralized finance.
Nevertheless, the current situation surrounding HTX is clearly playing out on Sun’s personal legal battle.
While Sun’s dispute focused on individual governance conflicts and alleged market manipulation, the HTX freeze directly impacts liquidity on wholesale exchanges and for retail savers.
The tension between compliance and decentralization
The impasse crystallizes a fundamental vulnerability within the modern stablecoin architecture and the broader tokenized asset sector.
While leading fiat-backed tokens like USDC and Tether routinely freeze individual portfolios directly linked to criminal enterprises, terrorist financiers, or North Korean hacking syndicates, implementing a blanket freeze on exchange-aggregated portfolios has serious collateral consequences for ordinary market participants.
The USD1 token has grown aggressively since its introduction, with its circulating supply exceeding $4.6 billion.
The asset is heavily focused on institutional players looking for a regulated, heavily audited alternative to older stablecoins, significantly supported by the high-profile political connections of its major sponsors.
Yet the forced delisting of HTX reflects the inherent friction between compliance at the institutional level and unauthorized access to the global market.
By neutralizing USD1 trading on a major international platform, the dispute shows how local regulatory designations, such as the UK’s crackdown on Russian evasion networks, can immediately ripple through the wider digital asset economy, creating immediate liquidity crises.
Exchange management indicated that all relevant asset pairs will remain offline indefinitely while they continue to attempt to negotiate a release of the frozen funds.
Until World Liberty Financial lifts the restrictions or provides a transparent account of its internal compliance review process, HTX customers will see their previously held USD1 fully converted into Tether.
Market participants and legal experts are now awaiting formal clarification from the World Liberty team on the exact evidentiary threshold required to trigger account suspensions at the protocol level.