LocalBitcoins Stops Cash Trades, Personal Offers on Platform
Multiple users have reported that crypto trading platform LocalBitcoins has stopped allowing customers to make in-person trades of crypto assets for cash in an anonymous fashion.
Reddit user u/GrayLifes first posted about this development on June 1, 2019, claiming that cash ads were removed from the platform without warning. A wide range of other users concurred, stating that all “local ads are hidden or deleted for the entire site,” without any option to search for possible traders nearby. “All my local trade ads are missing,” user u/scottemick claimed. “How can it even be called local bitcoins anymore?”
One of the largest peer-to-peer crypto exchanges in the world, LocalBitcoins has encountered a wide array of legal difficulties in the past several months. Based in Finland, the company began mandating that customers fill out KYC information in late March, breaking with the site’s long-running tradition of allowing anonymity. This rule change was made only after new legislation was passed by the Finnish Parliament.
As an international company, however, LocalBitcoins has found itself beholden to more regulatory forces than those of its home country alone. On May 24, the company announced that it was making a complete withdrawal of all services from Iran, banning Iranian users from the platform. Considering the new wave of sanctions that the United States has imposed on the country, LocalBitcoins likely pulled out largely to avoid running afoul of legal troubles with the U.S. government.
LocalBitcoins has attracted regulatory scrutiny from the U.S. regardless, however, and this may help to explain this major shift in the exchange’s business model. In April 2019, the U.S. Department of Justice (DOJ) sentenced a man to fines and prison time for running an unlicensed exchange, and then did the same to a second man in late May. In both cases, the DOJ specifically noted that these men advertised their businesses to area traders on LocalBitcoins.com, and considering that these businesses are now formally considered illegal, it seems obvious that the exchange would want to avoid running into trouble itself.Following the apparent change at LocalBitcoins, Reddit users began looking for alternative services. Although it is unclear how well the company will adapt to the existing ecosystem of conventional crypto exchanges, the company’s original model has been thoroughly dismantled by this point.