Local Bitcoin Is Acting Up
Many have taken to social media to express their frustrations, while news outlets in the Middle East, Africa and Asia have also reported on the situation. It appears that these accounts belong to longtime users; people who have been serviced by the exchange for many years, and the closures are happening without any prior warnings.
Have these customers violated the rules somehow? What could be the motivation for Local Bitcoin to rid itself of some very loyal clients? The messages these users have received are also based on false pretenses given that they say withdrawing one’s bitcoin stash is enough to delete the account. However, many of these individuals claim that they have been unable to move their digital funds.
One user of Local Bitcoin – who wished to remain anonymous at press time – explained the circumstances of his account closure:
One of my customers was due to travel out of the country and had to sell some of his bitcoins to be able to go only to notice on his way to the airport that he cannot even access his funds.
The exchange has issued a follow up message explaining that customers of certain countries must go through an “enhanced due diligence process” in order to continue their business with Local Bitcoins, though at the time of writing, it is unclear what this process entails, and the exchange has failed to provide any additional details.
One suggestion for the account closures revolves around new European legislation that took effect in early January. The legislation requires all users to provide their private data to exchanges so that they can be clear about who’s taking part in transactions and where money is coming from.
Local Bitcoin has often boasted that users can remain relatively anonymous on the platform, and that their identities will remain secure. However, it is widely rumored that Local Bitcoin is cooperating with the government agencies that instilled the legislation and is looking to remain compliant.
As a result, the exchange has seen its trading volume drop by as much as 70 percent during the final months of 2019.
In an interview, CEO of the exchange Sebastian Sonntag explained that the exchange, at one point, was signing up anywhere between 4,000 and 5,000 new users each day, but that many changes were coming to the platform that were likely to have an “impact on overall trading volume.”
Stuff Is Happening, but We’re Not Going to Tell You
We expect the situation to become more stable in the following weeks and improvements in the verification flow should also influence positively.
Local Bitcoin is based in Helsinki, Finland, and was founded in the year 2012. The company suffered from a hack last year that saw it lose nearly $30,000 in BTC funds.