Gueye, 21, captained Le Havre in Ligue 2 this season and his performances attracted the interest of several European clubs.
Last summer, Gueye and his agent at the time, Bakary Sanogo, agreed a deal with Watford. In June 2019, he travelled to the Udinese training ground -- owned by the Pozzo family who also control Watford -- and completed a secret medical.
On Jan. 15, six months before the end of his deal with Le Havre, Gueye signed a pre-contract with Watford and was officially unveiled by Watford on April 29.
However, during this time, the former France under-19 international changed agent and his mind about the move to England.
"I want to condemn the circumstances in which I signed a contract for Watford and what I consider being irregularities from their representatives. (...) Considering that my contract has not started yet, I duly note the end of any contractual links with Watford," he said in a statement to L'Equipe.
The player felt that Sanogo did not advise him well and he was unable to get the best financial deal he could have got as a free player.
His new agent Pierre-Henri Bovis has since tried to cancel his client's contract with the Premier League club.
Bovis said there have been "irregularities" and "errors" in the recruitment process of Gueye, referring, amongst other things, to the date of the medical.
Watford have refused to comment publicly on the matter but a source told ESPN that they believe there were no wrongdoings in the way they signed him and there is nothing wrong with Gueye's contract.
He is expected to arrive at the club's training ground on July 1 when his contract is due to start.
The transfer has been ratified but not by FIFA.