Finland-based peer-to-peer (P2P) cryptocurrency platform LocalBitcoins is shutting down operations after serving its customers for more than 10 years.
LocalBitcoins officially announced the termination of services on Feb. 9, citing the tough market conditions of the ongoing cryptocurrency winter.
“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,” LocalBitcoins CEO Nikolaus Kangas told Cointelegraph. At the time of the announcement, LocalBitcoins’ team had 50 employees.
LocalBitcoins encouraged all customers to withdraw their crypto assets from the platform, asking them to proceed with withdrawing Bitcoin (BTC) from the LocalBitcoins wallet. According to the announcement, users can withdraw crypto assets from LocalBitcoins for 12 months. “However, of course, we encourage you to proceed with withdrawing sooner,” the firm noted.
According to the termination timeline, LocalBitcoins will immediately suspend all new registrations from Feb. 9. Trading will be suspended Feb. 16, while after that date users will only be able to login into the wallet to withdraw their funds.
LocalBitcoins’ abrupt closure comes soon after the United States Financial Crimes Enforcement Network mentioned the platform among the biggest Bitcoin senders to the Russia-linked exchange Bitzlato. U.S. authorities launched a major enforcement action against Bitzlato, accusing the firm of money laundering and allegedly facilitating circumvention of sanctions against Russia.
Jukka Blomberg, chief marketing officer at LocalBitcoins, denied any kind of cooperation or relationship with Bitzlato in a statement to Cointelegraph in January. 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 stressed that LocalBitcoins has been regulated by the Finnish Financial Supervisory Authority since 2019 and strictly followed Know Your Customer and Anti-Money Laundering regulations.
As previously reported, Russia was once among the biggest markets for LocalBitcoins, topping Bitcoin trading volumes on the platform as of June 2020. Overall trading volumes on LocalBitcoins have been plummeting after 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 bounced back since. LocalBitcoins’s 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.