Bitcoin marketplace LocalBitcoins is shutting down. LocalBitcoins encourages its customers to move their funds out of the service within the next 12 months.
In the press release published by LocalBitcoins, it is stated that the main reason for closing the service is the extremely difficult and long-term declining crypto market.
Registration of new customers to the service has already been suspended. Trading and deposits will stop on February 16th.
After February 17th, the only action that users can take in the service is to withdraw funds or transfer them elsewhere.
What is LocalBitcoins?
Founded in 2012, Finnish LocalBitcoins was one of the earliest and most popular peer-to-peer bitcoin marketplaces.
Especially in the early days of bitcoin, LocalBitcoins played a significant role in directing liquidity to the crypto market. It also created a lucrative arbitrage market, as users could sell bitcoin above the spot price and buy more bitcoin from centralized exchanges at a lower price.
Trading in the service worked so that individual sellers set the conditions for the trade. For this reason, the platform has often been compared to Amazon or eBay.
On the LocalBitcoins marketplace, sellers provide, for example, relevant exchange rates and accepted payment methods that buyers must follow. The platform then charges a flat 1% fee for all successful transactions.
LocalBitcoins was at its most popular in 2017 when it handled up to over $100 million worth of trades on a weekly basis. Over the past four months, however, that number has dropped dramatically. Only about $5.5 million was traded in the past month.
The service was very popular in Venezuela, Colombia, and Russia. Almost half of LocalBitcoins’ volume came from the aforementioned countries during 2020.
Back in 2018, LocalBitcoins led Kauppalehti’s list of the most financially successful companies in Finland.
At the beginning of January 2023, the company employed approximately 110 employees, and their headquarters were located in Ruoholahti, Helsinki.
Why is LocalBitcoins shutting down?
In the announcement, which you can read on the LocalBitcoins website or social media channels, it is stated that the reason for the closure of the service is the long and difficult crypto winter.
In its press release, the company describes its challenges as follows:
”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.”
The company has also experienced strict regulation of the crypto industry in the past years. For example, in 2015, LocalBitcoins had to suspend operations in New York State because it could not obtain the BitLicence required by the state.
In 2020, the company had to comply with the very strict anti-money laundering regulations of the European Union, which hindered its business in Europe.
The first months of 2023 were not easy for LocalBitcoins either. In January, the U.S. Treasury Department named the company as one of the operators that trade with crypto exchange Bizlato. Bizlato is accused of money laundering in the United States.
However, LocalBitcoins is not the only operator connected to Bizlato, as Binance’s name can also be found on Bizlato’s list of partners.
Jeremias Kangas, the founder of LocalBitcoins and former CEO and current board member, commented on the matter as follows:
“In general, I know that all business in Russia was shut down last year, and in general, sanctions and other regulations are followed.”
The operational management of LocalBitcoins also considers the US Treasury’s accusations unfounded. According to them, LocalBitcoins has never had any cooperation or relationship with Bitzlato.
LocalBitcoins managed to be in operation for a respectable 10 years.
An exceptionally challenging crypto winter
LocalBitcoins is not the first victim of this crypto winter and probably not the last one, either. The big wheel started turning already in the spring of 2022 when the cryptocurrency Terra Luna, which had gained great popularity among investors, collapsed.
As a result of Luna’s collapse, many other crypto firms and investment companies also filed for bankruptcy, the largest of which were Three Arrows Capital and Celcius.
The crypto market suffered throughout the summer from investor uncertainty, and a new crisis was already lurking around the corner. This time it was one of the world’s largest crypto exchanges, FTX.
FTX’s bankruptcy shook the entire crypto market, as a dizzying 9 billion dollars were missing from its balance sheet.
What made the bankruptcy in question special was the at least confusing behavior of FTX CEO and founder Sam Bankman-Fried on his own social media channels before and after the bankruptcy announcement.
The aftermath of FTX’s bankruptcy is still being processed, and it is still too early to say how many financial companies or crypto companies will become vicarious victims because of FTX.
Transfer of funds to Coinmotion
In its release, LocalBitcoins recommends its customers withdraw funds from the service as soon as possible.
All users of LocalBitcoins will be affected by the service shutdown. If you have funds on that platform and want to transfer them to a secure Nordic crypto service, you can easily withdraw the funds to Coinmotion.
Coinmotion is the first company in Europe to be licensed as a payment institution and officially registered as a digital currency service provider. The business license and registration of the company have been granted by the Financial Supervisory Authority.
In order to obtain permits, the company has had to pass several safety-related audits and inspections.
Coinmotion has almost over ten years of experience in securely depositing cryptocurrencies. We are one of the longest-running Bitcoin investment companies in the world and have developed our security practices to the highest level. Most of our customer funds are stored in cold wallets that are inaccessible to all hackers.
Here’s how to transfer your funds to Coinmotion:
- Register as a Coinmotion customer
Coinmotion is a security-first crypto service provider. You can open a free account here.
- Set up your account
Setting up an account only takes a few minutes.
First, select your account type by clicking Personal or Business.
After that, enter your email address, and password in the fields indicated. Read and accept the terms and conditions and the privacy policy. Select “Create Account.”
The next page will ask you to confirm your email address. You will receive a confirmation code in your email automatically. Enter the code in the field provided for it and select “Verify email.”
The next page will ask you to confirm your phone number. Select the correct country code and then enter the rest of your number and select “Confirm via SMS.”
After that, we ask you to fill in more detailed personal information that the KYC process requires. Filling out the detailed information takes about two minutes in total.
- Send cryptocurrency to Coinmotion
Select Transfers from the main menu, then click the Receive tab.
On this page, you can see all the cryptocurrency addresses you have. If you want to receive Bitcoin from LocalBitcoins, select “Bitcoin” from the dropdown menu.
The list shows all the addresses you have created. When you click on the address, a popup window opens. You can copy the address to the clipboard there.
Once the address is copied, paste it into the “send to” field in LocalBitcoins or your external wallet and hit send. Double-check that you are sending the right cryptocurrency!
- Receive
Once your transaction is validated in the blockchain, your funds will arrive in your Coinmotion account. We will send you an email when the funds are received.
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