LocalBitcoins to Shut Down After 10 Years Amid Challenging Market Conditions
Bitcoin exchange LocalBitcoins has announced its closure after serving customers for more than 10 years, citing the ongoing bear market.
In a recent posting on its website, the exchange said it would be shutting down in the coming weeks due to tough market conditions. The platform said they reached this decision after efforts to overcome the current crypto winter did not come to fruition. It said:
"We are therefore sad to share, that 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."
LocalBitcoins detailed that it would be discontinuing sign-ups starting Thursday, February 9, and will suspend trading by February 16. The exchange advised customers to withdraw funds as soon as possible. Clients have 12 months to remove funds from their wallets.
Founded in 2012, LocalBitcoins was one of the earliest and most popular peer-to-peer bitcoin trading platforms. In the early days of Bitcoin, the exchange became a key marketplace that drove liquidity. It also produced a lucrative arbitrage market as users could sell BTC at a spread above the spot price and then buy the asset on centralized exchanges for cheaper.
LocalBitcoins has approximately 8 million customers in more than 190 countries, according to its website. Since February 2021, the exchange has seen a continued decline in its trading volume, which hit an average of 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 has plunged to as low as $5.5 million.
Notably, the move comes after LocalBitcoins was named by the U.S. Treasury last month as one of the companies transacting with Bizlato, a crypto exchange accused of money laundering. As reported, Binance and TheFiniko were also identified as counterparties to Bitzlato, which is now facing money laundering charges in the US.
Last month, US authorities arrested Anatoly Legkodymov, the Russian founder of Hong Kong-registered crypto exchange Bitzlato, for allegedly processing $700 million in illicit funds. His charges also include running the exchange as an unregistered money-transmitting business that easily facilitated the transfer of illicit funds.
LocalBitcoins has also faced regulatory scrutiny in other parts of the world. Back in 2020, the platform had to comply with strict European Union anti-money laundering regulations that pressured its business in Europe. In 2015, LocalBitcoins had to halt operations in the state of New York after failing to obtain a BitLicense from the state.