Brief Look at LocalBitcoins
LocalBitcoins, one of the oldest platforms for peer-to-peer (P2P) Bitcoin trading, shut down in February 2023. The main reason was the prolonged downturn in the cryptocurrency market (the so-called “crypto winter”). This downturn led to a decline in user numbers. The company admitted that it was unable to restore trading volumes to previous levels and was therefore forced to cease operations.
Additionally, LocalBitcoins faced increasing regulatory scrutiny. Since 2019, LocalBitcoins had been under the supervision of the Finnish Financial Supervisory Authority, which led to the implementation of strict KYC (Know Your Customer) and AML (Anti-Money Laundering) rules. Despite this, the platform came under scrutiny from U.S. authorities due to reports of user transactions involving the Russian exchange Bitzlato, which was accused of money laundering.
Although LocalBitcoins itself was not involved in any fraudulent schemes, users occasionally encountered scammers on the platform, particularly when attempting to bypass the built-in escrow system. Despite security measures such as two-factor authentication, the risk of fraud remained high.
The closure of LocalBitcoins marked the end of an era for P2P cryptocurrency trading, as the platform had been a pioneer in this field since its founding in 2012.
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