ZachXBT criticizes UK sanctions as HTX users report frozen funds

Blockchain investigator ZachXBT has publicly criticized recent UK sanctions targeting entities linked to the crypto exchange HTX, after users reported their funds being frozen and transactions blocked by compliance systems.

The UK government earlier this year announced sanctions against Huobi Global S.A., a Panama-registered company affiliated with HTX. British authorities alleged the entity facilitated over $1.5 billion in transactions connected to Russian sanctions evasion. The sanctions were part of a broader crackdown on what the UK calls the A7 shadow finance network.

As compliance providers responded to the designation, wallets linked to the sanctioned entity came under enhanced scrutiny. Users on social media reported difficulties moving funds through third-party services. Some platforms introduced restrictions on assets traced back to HTX-related addresses.

FixedFloat, a non-custodial exchange, said it updated its compliance procedures and would suspend funds originating from Huobi. Some community members noted that affected users were creating new wallets to regain access to services that had blocked their funds.

Address tainting becomes central issue

Address tainting has become a key point of debate. Compliance software flags not only wallets directly controlled by a sanctioned entity but also addresses that have previously transacted with those wallets. This means users who only had historical exposure to HTX-linked addresses can still be affected.

Writing on X, ZachXBT argued the sanctions appeared to be “a bit of an overreach.” He noted that earlier sanctions against crypto services like Blender and Hydra targeted platforms where illicit activity represented a large share of overall transactions. In contrast, HTX serves a large retail user base across Asia, so enforcement actions can hit users with no connection to the alleged misconduct.

He also claimed the sanctions category has become less useful for investigative work because exposure alone now generates elevated risk scores. ZachXBT further argued 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 rejects allegations, faces broader pressure

HTX has continued to reject allegations surrounding the UK action. When 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 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.

Scrutiny intensifies over Justin Sun links

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. Blockchain analytics data has highlighted significant transaction flows involving platforms associated with Sun and the broader Tron ecosystem.

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