Home News Breaking News: LocalBitcoins shuts down after 10 years due to challenging market conditions

James Carter

10 Feb 2023

Breaking News: LocalBitcoins shuts down after 10 years due to challenging market conditions

Bitcoin trading market LocalBitcoins has stated that it would no longer be operating, citing the prolonged bear market as the reason for the decision. The company has been serving customers for more than ten years.

Because of the difficult state of the market, the exchange announced in a message that was published not long ago on its website that it would be closing within the next few weeks. The platform explained that they came to this conclusion after their attempts to combat the ongoing crypto winter were unsuccessful. Consequently, they believe that this choice is the best course of action. It said:

“We are therefore sad to report that in spite of our efforts to overcome problems during the ongoing very cold crypto-winter, we have reluctantly come to the conclusion that LocalBitcoins can no longer perform its Bitcoin trading service. We are asking for apologies for any inconvenience this may cause.”

LocalBitcoins disclosed that it would no longer accept sign-ups beginning on Thursday, February 9, and would halt trading by February 16 at the latest. The exchange strongly recommended that consumers withdraw their monies as soon as they could. Customers have a year to access the monies in their wallets and withdraw them.

LocalBitcoins, which began operations in 2012, quickly became one of the well-known and widely used peer-to-peer networks for exchanging bitcoins. In the early stages of Bitcoin’s existence, the exchange quickly emerged as an important marketplace that was responsible for driving liquidity. It also resulted in the creation of a profitable arbitrage market since users were able to sell Bitcoin at a premium over its current price and then purchase Bitcoin on controlled exchanges at a lower price.

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According to the information provided on its website, LocalBitcoins serves about 8 million users in more than 190 countries. Trading volume at the exchange, which formerly reached an average of more than $40 million per week, has been falling steadily since February 2021 and has not recovered since then. LocalBitcoins completed around $100 million worth of deals on a weekly basis when it was at its peak in 2017, but that figure has dropped to as low as $5.5 million in the previous four months. LocalBitcoins’s peak year was 2017.

Notably, this decision comes after the United States Treasury designated LocalBitcoins as one of the organizations that had been conducting business with Bizlato, a cryptocurrency exchange that has been suspected of engaging in money laundering. According to the reports, Binance and TheFiniko have also been named as counterparties to Bitzlato, which is currently facing accusations in the United States related to money laundering.

Anatoly Legkodymov, the Russian creator of the Hong Kong-registered cryptocurrency exchange Bitzlato, was arrested in the United States by authorities one month ago on allegations that he processed $700 million in illegal payments. In addition to this, he is accused of operating the exchange as an unlicensed money-transfer firm that made it simple to move illegal monies around.

Additionally, regulatory scrutiny has been directed towards LocalBitcoins in various other parts of the world. Back in the year 2020, the platform was under pressure from European Union anti-money laundering legislation because it needed to comply with those regulations in order to do business in Europe. Due to the company’s inability to get a BitLicense from the state of New York in 2015, LocalBitcoins was forced to cease all activities within the state.