LocalBitcoins will no longer offer P2P services, users have 12 months to withdraw funds
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Finland-based Peer-to-Peer (P2P) cryptocurrency platform, LocalBitcoins, announced recently that it would close down shop. The decision comes after 10 years in business, during which the platform served countless customers from all over the world.
LocalBitcoins will discontinue its service pic.twitter.com/42Qi9SdwhS
— J.G.Montoya.Hodl (@JGMontoyaS) February 9, 2023
The official announcement was made yesterday, February 9th, and the platform stated that the tough market conditions are to blame. The ongoing crypto winter has been hard on crypto businesses all over the globe, and LocalBitcoins is no exception.
— LocalBitcoins (@LocalBitcoins) February 9, 2023
Its CEO, Nikolaus Kangas, stated that “Regardless of our efforts to overcome challenges and turn our trade volumes and declining market share back to growth, we have regretfully concluded that LocalBitcoins can no longer provide its Bitcoin trading service.”
At the time when the announcement was made, LocalBitcoins had 50 employees. The platform also encouraged users to withdraw their digital assets, asking them to withdraw Bitcoin from their wallets. The announcement also said that users would be able to withdraw their cryptocurrencies from the platform for the next 12 months. However, the sooner they do it, the better.
Based on LocalBitcoins’ current termination timeline, the platform has already suspended all new registrations as of yesterday. Trading itself will be allowed for about a week longer, but it too will be suspended on February 16th. After that date, users will only be allowed to log into their wallets in order to withdraw the funds. This will be possible for the next 12 months, and after that, even the wallet service will cease to work.
LocalBitcoins claims it has not served Russian users since October
The platform’s abrupt closure came as a surprise to many. It happened soon after the US Financial Crimes Enforcement Network mentioned it by name as one of the largest Bitcoin senders to the crypto exchange Bitzlato — one of the largest exchanges tied to Russia.
The US authorities have previously launched massive enforcement action against the Russian exchange, and the company was accused of money laundering and other illicit activities. One example is allowing Russians to circumvent the sanctions that have been in place for a year now, ever since the country invaded Ukraine.
According to LocalBitcoins’ chief marketing officer, Jukka Blomberg, there has not been any cooperation or relationship between the platform and Bitzlato. He said that, based on the platform’s data, there had been no transactions between the exchange and LocalBitcoins since October 2022. That was when the exchange stopped serving Russian user accounts or accounts of users that reside in Russia.
He further stressed that LocalBitcoins has been regulated since 2019 by the Finnish Financial Supervisory Authority. Ever since then, the platform has been following KYC and AML regulations extremely strictly.
However, it is no secret that Russia was previously among the biggest markets for LocalBitcoins. While the platform’s overall trading volumes reached its al-time high in December 2017, they have been going down ever since. As of February 2021, the daily volume fell under 1,000 BTC, and it never went back up.
