LocalBitcoins, one of the oldest and most popular peer-to-peer bitcoin trading platforms, announced Thursday that it will be shutting down in the coming weeks due to unfavorable market conditions. The Finland-based platform, which specializes in P2P and escrow services for users looking to buy or sell bitcoin via traditional bank transfers and cash deals across multiple currencies on a global scale, was named by the U.S. Treasury last month as one of the companies transacting with Bizlato, a crypto exchange accused of money laundering.[0]
Today, LocalBitcoins stopped allowing new signups. According to the timeline posted on its official website, Bitcoin trading will be suspended on February 16.[1] Following that, individuals will be able to solely access their wallets to take out their money.[2] Funds can be withdrawn by users over the course of the next twelve months.[3]
The platform had previously mentioned regulatory pressures in Europe as affecting its business, and in its announcement, the company said it would suspend new sign-ups on the platform on Feb. 9, while suspension of trading and using the LocalBitcoins wallet will take effect on Feb. 16. On February 17th, LocalBitcoins users will have the ability to log-in solely for the purpose of withdrawing their Bitcoins, according to the exchange.[4]
Data from CoinDance shows that weekly trading volume has been in a steady decline since 2021.[0] In the opening week of 2021, the trading volume was nearly $40 million.[5] By the end of January 2023, the figure decreased by 85%, reaching $5.7 million[5] [5] In stark contrast to the most recent numbers, the week ending December 2017 saw a volume of almost $130 million.[5]
The trading volume of LocalBitcoins has been averaging between $5 million and $7 million in the last four months, which is a significant decrease compared to its highest volumes of up to $100 million in 2017.[6] In January, FinCEN (United States Financial Crimes Enforcement Network) recognized LocalBitcoins as one of the top three counterparties sending to crypto exchange Bitzlato. It was alleged by prosecutors that a Hong Kong-registered entity, which had big Russian operations, helped to launder approximately $700 million worth of cryptocurrency.[0]
In addition, LocalBitcoins is far from the only crypto firm that has struggled to stay in business following the horror show that was 2022.[1]
0. “LocalBitcoins Matching Exchange, Cited By U.S. In Bizlato Case, To Close After 10 Years Of Operation” Forbes, 9 Feb. 2023, https://www.forbes.com/sites/digital-assets/2023/02/09/localbitcoins-matching-exchange-cited-by-us-in-bizlato-case-to-close-after-10-years-of-operation/
1. “End of an era: LocalBitcoins to discontinue its service by February” Kitco NEWS, 9 Feb. 2023, https://www.kitco.com/news/2023-02-09/End-of-an-era-LocalBitcoins-to-discontinue-its-service-by-February.html
2. “LocalBitcoins closes down P2P crypto exchange service” Cointelegraph, 9 Feb. 2023, https://cointelegraph.com/news/localbitcoins-closes-down-the-p2p-crypto-exchange-service
3. “LocalBitcoins To Shut Down P2P Exchange Service” BTC Times, 9 Feb. 2023, https://www.btctimes.com/news/localbitcoins-to-shut-down-p2p-exchange-service
4. “LocalBitcoins Shuts Down Amid Crypto Winter” CryptoPotato, 9 Feb. 2023, https://cryptopotato.com/localbitcoins-shuts-down-amid-crypto-winter/
5. “Crypto Winter Forces LocalBitcoins To Shut Down Operations” Ethereum World News, 9 Feb. 2023, https://en.ethereumworldnews.com/localbitcoins-to-shut-down-operations/
6. “LocalBitcoins Shuts Down after a Decade, Cites ‘Very Cold Crypto Winter’” Finance Magnates, 9 Feb. 2023, https://www.financemagnates.com/cryptocurrency/localbitcoins-shuts-down-after-a-decade-cites-very-cold-crypto-winter/