Helsinki-based peer-to-peer (P2P) cryptocurrency platform, LocalBitcoins, has announced that it is shutting down its operations after serving its customers for over 10 years. The company has cited the current tough market conditions of the ongoing cryptocurrency winter as the reason for its termination of services.
LocalBitcoins CEO Nikolaus Kangas spoke to Cointelegraph and stated, “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.”
Customers Advised to Withdraw Funds Immediately
LocalBitcoins has encouraged all of its customers to withdraw their crypto assets from the platform immediately. The company has asked its users to proceed with withdrawing Bitcoin from the LocalBitcoins wallet. Users have been given a 12-month window to withdraw their cryptocurrencies, but LocalBitcoins has advised them to do so sooner.
New registrations on the platform have been suspended since February 9, and trading will be suspended on February 16. After that date, users will only be able to log in to the wallet to withdraw their funds.
Accused of Cooperation With Bitzlato
LocalBitcoins’ abrupt closure comes soon after the United States Financial Crimes Enforcement Network (FinCEN) mentioned the platform among the biggest Bitcoin senders to the Russia-linked exchange, Bitzlato. U.S. authorities recently launched a major enforcement action against Bitzlato, accusing the firm of money laundering and allegedly facilitating the circumvention of sanctions against Russia.
However, Jukka Blomberg, the chief marketing officer at LocalBitcoins, denied any kind of cooperation or relationship with Bitzlato in a statement to Cointelegraph. He stated, “Based on our data, there have practically been no transactions between LocalBitcoins and BitZlato since October 2022, after we stopped serving Russian user accounts and accounts of users residing in Russia.” Blomberg also emphasized that LocalBitcoins has been regulated by the Finnish Financial Supervisory Authority since 2019 and has strictly followed Know Your Customer and Anti-Money Laundering regulations.
Trading Volumes on the Decline
LocalBitcoins was once among the biggest markets for Bitcoin, topping the trading volumes on the platform in June 2020. However, overall trading volumes on LocalBitcoins have been on a downward trend since reaching an all-time high in December 2017, according to data from Coin Dance. Weekly Bitcoin trading volumes on LocalBitcoins dropped below 1,000 BTC in February 2021 and have never recovered since. LocalBitcoins’ last recorded weekly BTC trading volumes amounted to 283 BTC, or about $6 million. In comparison, major exchanges like Coinbase trade $282 million in crypto on a daily basis, according to data from CoinGecko.
LocalBitcoins’ closure marks the end of an era for the P2P cryptocurrency platform. Despite its efforts to overcome the challenges faced in the tough market conditions, the company has regretfully announced that it can no longer provide its Bitcoin trading service. All customers have been advised to withdraw their funds from the platform as soon as possible.