Bitcoin exchange LocalBitcoins has announced its closure after more than 10 years of customer service, citing an ongoing bear market.
In a recent post on its website, the exchange said it would close in the coming weeks due to difficult market conditions. The platform said it made this decision after a failed effort to weather the current crypto winter. he 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 has announced that it will be suspending registrations starting Thursday, February 9th, and suspending trading until February 16th. The exchange advised customers to withdraw their funds as soon as possible. Customers must withdraw funds from their wallets within 12 months.
Founded in 2012, LocalBitcoins was one of the first and most popular peer-to-peer Bitcoin trading platforms. In the early days of Bitcoin, exchanges became a key market providing liquidity. It also created a lucrative arbitrage market as users could sell their BTC at a spread higher than the spot price and then buy the asset at a lower price on a centralized exchange.
According to the LocalBitcoins website, LocalBitcoins has around 8 million customers in over 190 countries. 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 allegations include operating the exchange as an unregistered remittance company that facilitates the transfer of illicit funds.
LocalBitcoins is also under scrutiny from regulators in other parts of the world. In 2020, platforms had to comply with strict European Union anti-money laundering rules that put pressure on businesses in Europe. In 2015, LocalBitcoins was forced to cease operations in New York State after failing to obtain a BitLicense from the State.