Key Takeaways:
HTX suspended trading of WLFI and USD1 on June 5 after World Liberty Financial froze user tokens on exchange-linked addresses, escalating a dispute over issuer control in crypto.
"These are assets legally purchased and owned by individual users," an HTX spokesperson said. "To date, we have received no clear explanation regarding the legal basis, scope, standards or resolution process behind this action."
The exchange halted four trading pairs — WLFI/USDT, USD1/USDT, BTC/USD1 and ETH/USD1 — at 13:00 UTC. HTX also suspended USD1 deposits and withdrawals, converting all user USD1 holdings to USDT at a 1:1 ratio. WLFI tokens remain safe on-chain, with withdrawals expected to resume once the freeze is lifted, the exchange said.
The freeze traces directly to UK sanctions designating Huobi Global S.A., the Panama-registered entity tied to HTX, on May 26 under the Russia (Sanctions) (EU Exit) Regulations 2019. The UK cited suspected facilitation of over $1.5 billion in flows supporting Russian sanctions evasion.
WLFI's token smart contract includes an admin-controlled blacklist function, a capability previously exercised in 2025 disputes with large holders including those linked to Justin Sun, according to public blockchain records. HTX was an early supporter of World Liberty Financial and the first major exchange to list USD1 on May 6, 2025. USD1 is a USD-pegged stablecoin with collateral held by BitGo Trust.
The incident sharpens a central tension in tokenized assets: regulatory compliance versus user sovereignty on public blockchains. While freeze functions are standard in compliant stablecoins like USDT and USDC, their use on retail holdings in a governance token marketed with DeFi elements raises questions about transparency and due process. HTX said it will keep services suspended until the freeze is resolved and will update users on developments.
For investors holding WLFI or USD1, the episode underscores how one jurisdiction's sanctions can cascade into retail user impacts across ecosystems. HTX has formally requested WLFI to restore access to the frozen addresses, though no timeline has been provided.
This article is for informational purposes only and does not constitute investment advice.
