ZachXBT slams UK sanctions as HTX users face frozen crypto

The UK’s sanctions against an $HTX-linked entity have triggered compliance restrictions across the crypto industry, prompting blockchain investigator ZachXBT to criticize the measures after users reported frozen funds and blocked transactions.

According to ZachXBT, recent UK sanctions targeting entities connected to $HTX have created unintended consequences for ordinary crypto users whose wallets previously interacted with the exchange.

Writing on X, the on-chain investigator said the sanctions appeared to be “a bit of an overreach” because compliance systems are now flagging wallets with historical exposure to $HTX-related addresses.

The controversy follows a sanctions package announced by the UK government earlier this year against Huobi Global S.A., a Panama-registered company affiliated with $HTX. British authorities alleged that the entity facilitated more than $1.5 billion in transactions connected to Russian sanctions evasion and included it in a broader crackdown on the so-called A7 shadow finance network.

As compliance providers responded to the designation, wallets linked to the sanctioned entity became subject to enhanced scrutiny.

Several users reported difficulties moving funds through third-party services, while some platforms introduced restrictions on assets traced back to $HTX-related addresses.

FixedFloat, a non-custodial exchange, said it had updated its compliance procedures and would suspend funds originating from Huobi. Some community members noted that affected users were attempting to move assets into newly created wallets in order to regain access to services that had blocked their funds.

Compliance tools are flagging historical $HTX transactions

Address tainting has become a central issue in the debate. The practice involves compliance software flagging not only wallets directly controlled by a sanctioned entity but also addresses that have previously transacted with those wallets.

Commenting on the development, ZachXBT argued that earlier sanctions against crypto services such as Blender and Hydra were directed at platforms where illicit activity represented a large share of overall transactions.

In contrast, he noted that $HTX serves a large retail user base across Asia, meaning enforcement actions can affect users who have no connection to the alleged misconduct.

He also claimed that the sanctions category has become less useful for investigative work because exposure alone now generates elevated risk scores.

ZachXBT further argued that UK authorities miss major illicit activity while focusing on $HTX, writing:

“Meanwhile, I have a legit $1.25 billion laundering case by an illicit actor the UK completely failed to detect.”

$HTX disputes sanctions links as tensions with $WLFI grow

Meanwhile, $HTX has continued to reject allegations surrounding the UK action. When the sanctions were announced, the exchange said they applied only to Huobi Global S.A., which it described as a legally separate entity from the $HTX trading platform.

Regulatory pressure on the exchange has been building for months. Earlier this year, the UK’s Financial Conduct Authority initiated High Court proceedings against Huobi Global over allegations that crypto services were promoted illegally to UK consumers.

Recent tensions have also emerged between $HTX and World Liberty Financial, the crypto venture backed by U.S. President Donald Trump. $WLFI recently froze on-chain addresses linked to $HTX as part of what it described as sanctions compliance reviews.

In response, $HTX delisted $WLFI’s USD1 stablecoin on June 7 and converted user balances into Tether’s USDT at a one-to-one ratio.

The exchange said $WLFI had acted unilaterally and without sufficient prior communication, while reiterating that the sanctioned Huobi Global S.A. should not be treated as the same entity as $HTX.

The dispute comes as scrutiny around $HTX and its links to entrepreneur Justin Sun continues to intensify.

According to previous reports, Huobi-related entities allegedly moved billions of dollars connected to sanctioned networks, while blockchain analytics data has highlighted significant transaction flows involving platforms associated with Sun and the broader Tron ecosystem.