HTX converts USD1 retail balances to USDT after WLFI freeze

HTX will convert eligible retail balances of the USD1 stablecoin into Tether (USDT) at a one-to-one rate beginning June 7 after World Liberty Financial blocked transfers from several HTX-controlled blockchain addresses and the exchange suspended USD1 trading pairs on June 5 at 13:00 UTC.

The exchange disabled the WLFI/USDT, USD1/USDT, BTC/USD1 and ETH/USD1 trading pairs and announced the systematic conversion of retail USD1 holdings to USDT to protect customer assets while it seeks to regain access to the frozen addresses.

World Liberty Financial used a smart-contract function to restrict transfers from the exchange-controlled wallets. The project issued an advisory reminding counterparties of its compliance protocols and its technical ability to sever connections with restricted networks, noting recent international enforcement actions.

On May 26, British authorities sanctioned Huobi Global S.A., alleging the firm processed about $1.5 billion linked to the A7 payments network and the sanctioned Russian exchange Garantex. WLFI’s wallet freezes followed those designations; WLFI’s public notices did not name HTX.

HTX rejected WLFI’s rationale, arguing the locked funds belong to ordinary retail customers and are not connected to sanctioned actors. In a statement, HTX spokesperson Molly Fu wrote that the locked capital belongs exclusively to ordinary retail buyers and has no link to sanctioned actors. The exchange has asked WLFI to reverse the blockchain-level restrictions and to provide evidence for any compliance determinations affecting customer holdings.

WLFI’s token architecture gives administrators the power to halt transfers. In September 2025 the project used that authority to freeze tokens tied to Justin Sun after filing a lawsuit alleging market manipulation and breaches of investor agreements; that earlier action targeted an individual’s holdings rather than exchange-aggregated wallets.

USD1 launched in late 2024 and has grown quickly, with a reported circulating supply above $4.6 billion. The token has been promoted to institutional counterparties as a fiat-backed alternative and is associated with political backers from the Trump family who helped launch World Liberty Financial.

HTX said it will keep the affected trading pairs offline until WLFI either removes the freezes or provides a transparent accounting of its compliance review. Until then, retail customers who held USD1 on HTX will see their balances converted to USDT at parity. HTX warned that blanket freezes on exchange-aggregated wallets can create wide collateral effects for ordinary customers.

Market participants and legal experts are awaiting WLFI’s clarification on the standards and evidence required to trigger the protocol-level freezes. HTX continues to press for immediate relief and for WLFI to disclose the basis for the action that locked the exchange-controlled addresses.