Helsinki-based firm suspended new signups blaming challenges during the so-called crypto winter that began last year.
gettyLocalBitcoins, one of the earliest and most popular peer-to-peer bitcoin trading platforms, announced Thursday it would be shutting down in the coming weeks, citing unfavorable market conditions. It was named by the U.S. Treasury last month as one of the companies transacting with Bizlato, a crypto exchange accused of money laundering, and it had previously mentioned regulatory pressures in Europe as affecting its business.
In a posting on its website the company said “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.”
New signups are suspended as of today, and trading and deposits will halt on February 16. After February 17, users will only be able to withdraw funds, with 12 months to do so.
The Helsinki-based firm was founded in 2012, and unlike such exchanges as Coinbase and Kraken operated a decentralized service, matching bitcoin buyers and sellers, with coins held in escrow until both parties confirmed a transaction.
LocalBitcoins has about 8 million customers in more than 190 countries, according to its website. Its trading volume has been steadily declining since February 2021, when it averaged over $40 million a week. At its peak in 2017, LocalBitcoins processed roughly $100 million worth of trades on a weekly basis but in the past four months that figure dropped to the $5.5-$7.5 million range, according to data from bitcoin statistics platform CoinDance.
The exchange was especially popular in Russia, Venezuela and Colombia, with 41% of its volume coming from users in these countries, LocalBitcoins reported in June 2020.
The platform previously offered in-person cash trading but had to remove this feature and tighten its know-your-customer/anti-money laundering policy in June 2019 after Finland passed the Act on Virtual Currency Service Providers.
In January, the United States Financial Crimes Enforcement Network (FinCEN) named LocalBitcoins as one of the top three sending counterparties to crypto exchange Bitzlato. Prosecutors alleged that the Hong Kong-registered entity with vast Russian operations facilitated the laundering of some $700 million worth of crypto.
