LocalBitcoins Matching Exchange, cited by the US in the Bizlato case, is closing after 10 years of operation
The Helsinki-based firm suspended new registrations, blaming challenges during the so-called crypto winter that began last year.
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LocalBitcoins, one of the earliest and most popular peer-to-peer bitcoin trading platforms, announced on Thursday that it would shut down in the coming weeks, citing unfavorable market conditions. It was named by the US Treasury Department last month as one of the companies trading with Bizlato, a crypto exchange accused of money laundering, and it had previously cited regulatory pressure in Europe as affecting its business.
In a post on its website, the company said “regardless of our efforts to overcome challenges during the ongoing very cold crypto winter, we have regrettably concluded that LocalBitcoins can no longer offer its bitcoin trading service.”
New registrations are suspended as of today, and trading and deposits will stop on February 16. After February 17, users will only be able to withdraw money, 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 confirm a transaction.
LocalBitcoins has about 8 million customers in more than 190 countries, according to its website. Trading volume has been steadily declining since February 2021, when it averaged over $40 million per week. At its peak in 2017, LocalBitcoins processed roughly $100 million worth of trades on a weekly basis, but over the past four months, that number has fallen to $5.5-7.5 million, according to data from bitcoin statistics platform CoinDance.
The exchange was particularly popular in Russia, Venezuela and Colombia, with 41% of volume coming from users in those 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 Virtual Currency Service Providers Act.
In January, the United States Financial Crimes Enforcement Network (FinCEN) named LocalBitcoins as one of the top three sending counterparties to the crypto exchange Bitzlato. Prosecutors alleged that the Hong Kong-registered entity with vast Russian operations facilitated the laundering of around $700 million worth of crypto.
