Local ICP ledger transfer test error?

You’re encoding the older hex ICP address format to bytes and then try to create a Principal from it. This will result in an invalid Principal (larger than 29 bytes, principals within Rust canisters like the ledger have a length limit check that’s currently missing in Motoko).

As I mentioned in your other forum post, you can’t send to this address format with the ICRC1 method. You’ll need to use the older transfer method or ask the user for his address in the newer ICRC1 format.