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"Love Island" star Huda Mustafa 's livestream with boyfriend Louis Russell turned ugly when they laughed at a fan calling Olandria Carthen the N-word ... now they're all responding to give their side of the story. Play video content

So here's what Huda had to say ... she's claiming she did hear the N-word, but that's all. According to her, she didn't know the unknown caller -- who sounded like a small child -- was using the word to describe Olandria ... but that still begs the question, why did they laugh???

Huda, wrote, "laughter was because it was AWKWARD." Hmmmm... Instagram / @hudabubbaaa

She added, "I really don't condone racism, which is why it was immediately hung up ... whoever said it is in the wrong."

As for Louis -- in a since-deleted I

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