According to the communications director of LocalBitcoins, the company’s closure decision has nothing to do with the US criminal investigation.
The Helsinki-based LocalBitcoins company is closing its cryptocurrency bitcoin brokerage service.
The company founded in 2012 tells about it in the bulletin (you will switch to another service).
The company justifies the closure with the long-lasting “crypto winter”. The term refers to a period when cryptocurrency exchange rates are low and interest in crypto trading has waned.
Director of Communications at LocalBitcoins Cecilia Alho tells via email that the company’s trading volumes and market share have been declining for a long time and the deep downturn in the crypto market has worsened the situation.
LocalBitcoins has been operating in different parts of the world. Through the service, customers have traded bitcoins directly with each other using local currency.
Customers have also been able to store their bitcoins in the company’s service.
LocalBitcoins is now urging its customers to withdraw their funds and bitcoins from the service.
Russia has previously been one of LocalBitcoins’ largest market areas, says someone who follows the cryptocurrency industry Cointelegraph website (you are moving to another service).
According to Alho, since October 2022, Russia’s share of LocalBitcoins’ turnover has been zero percent, and before that it was about 7-8 percent.
– LocalBitcoins has complied with the sanctions regarding Russia, Russian customers and customers living in Russia, says Alho.
The United States mentioned the Finnish service in the criminal investigation
LocalBitcoins announced the shutdown of its platform shortly after the company’s name surfaced in January by the US Financial Crimes Enforcement Network In a FinCEN criminal investigation (you will switch to another service).
According to FinCEN, LocalBitcoins has been one of the platforms through which the most bitcoins have been sent to the Russia-connected crypto exchange service Bitzlato.
– The closing decision has nothing to do with the criminal investigation against Bitzlato, and we are in no way involved in it, says Alho.
US authorities suspect Bitzlato of money laundering. The US Federal Police FBI arrested the Russian founder of Bitzlato Anatoly Legkodymov in January in Miami.
Legkodymov is suspected of having transferred illegal funds worth more than 700 million dollars, says Politico online magazine (you are moving to another service).
In Finland, the Financial Supervisory Authority supervises the operation of LocalBitcoins.
Advisor to the Financial Supervisory Authority Hanna Heiskanen tells that the Financial Supervisory Authority does not take a position on whether the US authorities have been in contact with them regarding LocalBitcoins.
– The Financial Supervisory Authority has not deregistered LocalBitcoins. The decision to stop operations comes from the operator himself, says Heiskanen.
Funds were transferred to the dark market through Bitzlato
Bitzlato is registered in Hong Kong, but has had significant operations in Russia.
According to FinCEN, Bitzlato had imposed only minor identification obligations on its customers and its service was used, among other things, for money transfers to trading places operating in the dark web, such as Hydra Market, where illegal products and services are sold.
Mainly aimed at Russians, Hydra was shut down in April 2022 because it sold drugs, hacking services and people’s personal information.