HTX, the crypto exchange tied to Justin Sun, has delisted the Trump family-backed stablecoin USD1, accusing World Liberty Financial of freezing several on-chain addresses linked to the exchange without adequate communication or legal grounds. HTX stated that World Liberty imposed restrictions during sanctions compliance reviews, limiting the circulation of certain assets connected to those addresses. As a result, the exchange halted deposits, conversions, and trading pairs involving USD1, including USD1/USDT, WLFI/USDT, BTC/USD1, and ETH/USD1. User USD1 balances will be converted to Tether (USDT) at a 1:1 ratio, though the exact timeline remains undisclosed.
Dispute over freeze justification. HTX argued that World Liberty Financial acted without proper disclosure or legal basis, harming user interests, and called for restoring access to the affected addresses. World Liberty has not publicly confirmed whether it froze the addresses cited by HTX, but said on X that it maintains risk-based sanctions compliance controls following recent sanctions updates.
Lawsuits escalate between Sun and World Liberty
The delisting marks a widening legal battle. In April, Sun sued World Liberty Financial, alleging it froze his linked tokens and threatened to burn them. A month later, World Liberty countersued Sun, accusing him of false statements, prohibited transactions, short-selling, and straw purchases violating token sale terms. HTX indicated it may pursue legal remedies to protect users.
UK sanctions add pressure. On May 26, UK authorities sanctioned Huobi Global S.A. over suspected financial services benefiting Russia's government. HTX rejected any link to its current operations, stressing that Huobi Global S.A. is a separate entity. The timing of the address freeze just after the sanctions raises questions about HTX's compliance risk management.
Implications and outlook
The USD1 delisting transforms a compliance issue into a broader conflict involving legal claims, frozen assets, and sanctions. With lawsuits ongoing, the stablecoin's trading access has been directly hit. If World Liberty maintains the freeze, USD1 faces a tougher path to mainstream exchange listings. HTX users and market makers may adjust positions due to halted pairs. Both sides have traded accusations on social media without providing detailed evidence. The situation could involve court injunctions or regulatory intervention. For traders, USD1's liquidity risk has spiked, and its market acceptance will face heightened scrutiny.