LocalBitcoins Matching Exchange, Cited By U.S. In Bizlato Case, To Shut Down After 10 Years

LocalBitcoins, the crypto firm named by the US treasury in the Bizlato exchange case, has announced to shut down its operations citing unfavourable market conditions. 

LocalBitcoins, one of the earliest and most popular P2P (Peer-to-Peer) bitcoin trading platforms, recently announced the closure of operations in the coming weeks. The company cited unfavourable market conditions. LocalBitcoins was also named in the Bizlato exchange money laundering case by the US. Moreover, the company also had previously mentioned regulatory pressures in Europe impacting the business.

The company stated on its official website, “regardless of our efforts to overcome challenges during the ongoing very cold crypto-winter, we have regretfully concluded that LocalBitcoins can no longer provide its bitcoin trading service.”

As of today, new registrations are suspended, and operations of trading and deposits will halt on February 16th. After which, users will only be able to withdraw funds, in a one-year time frame. 

LocalBitcoins was founded in 2012 in Helsinki, Finland. Unlike such exchanges as Coinbase and Kraken operated with decentralised service, matching bitcoin buyers and sellers with coins held in escrow until both parties confirmed their transactions.

The company has about 8 million customers in over 190 countries as per the data from the website. Its trading volume was also experiencing a decline since February 2021, when it averaged more than $40 a week. Compared to its peak in 2017, LocalBitcoins used to process roughly $100 million worth of transactions on a weekly basis. But in the past four months, the figures dropped drastically according to the data from CoinDance, the bitcoin statistics platform. 

The exchange was especially popular in Russia, Venezuela and Colombia, with 41% of user traffic from these nations as per reports. Previously, the platform offered in-person cash trading but had to stop this operation to strengthen the KYC/AML (Know Your Customer/Anti Money Laundering) policy in 2019 after Finland passed the act on Virtual currency service. 

In January, FinCEN (the United States Financial Crimes Enforcement Network) also named LocalBitcoins as one of the top three sending counterparties to crypto exchange Bitzlato. The prosecutors accused the exchange of connections with Russian operators facilitating crypto worth $700 million. 

Suggested Read:

FinCEN Alerts FIs of Sanction Evasion by Russian Entities Implicated in U.S. Commercial Property Investments