Justin Sun hit back. HTX delisted USD1, the stablecoin from Donald Trump's World Liberty Financial (WLFI), on Sunday. WLFI had frozen the exchange's on-chain addresses without notice. HTX called it a violation of user rights and promised legal action.
What Happened
On June 7, HTX suspended four trading pairs: WLFI/USDT, USD1/USDT, BTC/USD1, and ETH/USD1. Deposits and conversion services for USD1 are no longer available. Users holding USD1 on the platform will receive Tether (USDT) at a 1:1 ratio through automatic conversion. HTX said it will announce the exact timeline separately.
In its statement, HTX said WLFI "unilaterally imposed a freeze on specific HTX on-chain addresses based on sanctions compliance reviews" without sufficient prior communication, adequate contractual or legal grounds, transparent disclosure, or adherence to due process. HTX says the freeze infringed the rights of its users.
Why WLFI Froze the Addresses
On May 26, the United Kingdom sanctioned Huobi Global S.A., the entity formerly behind HTX, citing "reasonable grounds to suspect" that it supported Russia through financial services. On Wednesday, WLFI posted on X: "In light of recent sanctions updates, World Liberty Financial maintains risk-based sanctions compliance controls." WLFI did not publicly confirm or deny that it specifically froze HTX's addresses.
HTX argues that Huobi Global S.A. is "distinct from the online HTX exchange" and that the sanctions designation should not affect the platform. The short version: WLFI had a reason to act on sanctions, but according to HTX they targeted the wrong entity.
The Legal War: Sun vs WLFI Since April
This freeze is not the first escalation. In April, Justin Sun sued WLFI, claiming the platform froze his tokens and threatened to burn them "without any proper justification." In May, WLFI counter-sued Sun for defamation, alleging he made false statements about the platform and violated WLFI token sale terms through prohibited transfers, short-selling, and straw purchases.
Now HTX is adding another layer: the delisting itself, plus a threat of "legal remedies." Two lawsuits and one major delisting in two months. The split between WLFI and HTX is both public and deep.
What This Means for USD1
World Liberty Financial counts Donald Trump and his sons, Donald Jr., Eric, and Barron, as advisers. USD1 is positioned as a dollar-pegged stablecoin. This is not the first time the token has ended up at the center of regulatory and reputational trouble.
The broader issue the HTX situation reveals is straightforward. The freeze mechanism built into stablecoins lets the issuer unilaterally stop token circulation at any address. For exchanges, that is a direct risk. When the frozen addresses belong to a trading platform, the damage goes beyond individual token holders and hits all liquidity around that asset. The market is waiting for WLFI to give a public explanation of the grounds and scope of the freeze.
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