LocalBitcoins, a peer-to-peer (P2P) bitcoin trading platform located in Finland, has announced that it would be ceasing operations after more than a decade of providing services to its users.
On February 9, LocalBitcoins made the formal announcement that company will be discontinuing its services, citing the challenging market circumstances caused by the protracted bitcoin winter.
LocalBitcoins urged all of its clients to remove their cryptocurrency holdings from the site and instructed them to begin the process of removing Bitcoin (BTC) from the wallet associated with their LocalBitcoins account. According to the notification, customers have the ability to withdraw their cryptocurrency assets from their LocalBitcoins accounts for a period of one year. The company made the following observation: “However, of course, we advise you to continue with withdrawing sooner.”
According to the timeframe for the shutdown, starting on February 9, LocalBitcoins will instantly stop accepting any new registrations. On February 16th, all trading will be halted, and after that date, users will only be allowed to log in to their wallets to withdraw monies from their accounts.
The sudden shutdown of LocalBitcoins comes not long after the United States Financial Crimes Enforcement Network named the site as one of the most significant Bitcoin senders to the Russia-connected exchange Bitzlato. The United States authorities have initiated a significant enforcement action against Bitzlato, accusing the company of engaging in money laundering and allegedly assisting in the evasion of sanctions imposed on Russia.
Since October 2022, when we ceased providing Russian user accounts and accounts of users resident in Russia, our records show that there have been almost no transactions between LocalBitcoins and BitZlato. This information is based on the data we have collected.
Blomberg further emphasized that Know Your Customer and Anti-Money Laundering requirements were adhered to by LocalBitcoins in a stringent manner and that the company has been regulated by the Finnish Financial Supervisory Authority since 2019.
As was noted in the past, Russia was at one time one of the most important markets for LocalBitcoins. As of June 2020, the country had the highest volume of Bitcoin trades on the site. According to statistics provided by Coin Dance, the total trade volumes on LocalBitcoins have been steadily decreasing after hitting an all-time high in December of 2017.
Since February 2021, when they fell below 1,000 BTC for the first time, weekly Bitcoin trade volumes on LocalBitcoins have never recovered to their previous levels. The most recent weekly BTC trade volume that was reported on LocalBitcoins was 283 BTC, which is equivalent to around $6 million. According to statistics provided by CoinGecko, large cryptocurrency exchanges such as Coinbase conduct daily transactions totaling $282 million in digital currency.