On-chain investigator ZachXBT has sharply criticized the UK’s sanctions against Huobi Global S.A., arguing that the measures are causing widespread collateral damage to regular crypto users. The sanctions, part of a broader crackdown on a so-called A7 shadow finance network, targeted the Panama-registered entity for allegedly facilitating over $1.5 billion in transactions tied to Russian sanctions evasion. However, compliance software used by third-party services now flags any wallet with historical exposure to HTX-related addresses, resulting in frozen funds and blocked transactions for numerous users.
In a series of posts on X, ZachXBT called the sanctions “a bit of an overreach,” noting that address tainting has been “catastrophic.” He contrasted the situation with earlier sanctions on services like Blender and Hydra, where illicit activity dominated. HTX serves a vast retail user base across Asia, meaning even those with no connection to alleged misconduct are being caught in the dragnet. “Meanwhile, I have a legit $1.25 billion laundering case by an illicit actor the UK completely failed to detect,” he added, questioning the focus on HTX instead of more severe crimes.
The sanctions have also triggered a direct confrontation between the exchange and World Liberty Financial, a crypto venture backed by the Trump family. WLFI froze certain on-chain addresses linked to HTX as part of its own sanctions compliance review, prompting HTX to delist WLFI’s USD1 stablecoin on June 7. The exchange converted user balances into Tether’s USDT at a 1:1 ratio and suspended trading pairs such as WLFI/USDT, USD1/USDT, BTC/USD1, and ETH/USD1. HTX argued that WLFI acted without sufficient prior notice, clear legal grounds, or due process, and demanded the freeze be reversed, warning it may take legal action.
The delisting has intensified a pre-existing legal battle between Justin Sun, who is associated with HTX, and World Liberty Financial. Sun previously sued WLFI over frozen tokens, and WLFI countersued over alleged false information and unauthorized transfers. The dispute now touches on broader issues of stablecoin issuer control, sanctions compliance, and user rights when smart-contract functions can freeze assets based on unilateral reviews.
