I got some frantic messages from friends of mine the other morning because there are a lot of people that use localbitcoins in order to easily obtain fiat currency in whatever country they happen to be in. We all enjoyed the extremely easy and relatively anonymous nature of the exchange and it was always pretty easy to get some cash into your bank, anyone else's bank, or a variety of other ways of offloading a bit of BTC for some cash money.
The company announced that they are no longer going to be operating as an exchange as of February 16th and after that point the only thing that you will be able to use the site for will be to withdraw any funds that you have inside of it.
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The reason they provided for shutting down was because of the "ongoing crypto winter" and other unfavorable market reasons. While I guess I can agree with that to a certain degree, it seems to me as though they would have still been making enough money to carry on. I believe that their official reason is not the real reason at all but that is what they have to say in order to save some face after 10 years of being one of the most popular exchanges of its sort.
They are based out of Finland and just like any other western society, the countries of the EU have governments and tax laws that are very anti-crypto. Basically the government in the EU wants to be all up in your finances and know everything about what you do so that they can get their piece of every cent you make in the form of taxation.
I believe that localbitcoins was either pressured by government entities to cease operations, or the people running it simply got tired of all the regulations that change so quickly. To me localbitcoins is the obvious target for any government that doesn't like the idea of untaxable purchases kind of like how thepiratebay was a target for anti-piracy laws despite the fact that there are hundreds of other torrent sites just like it.
I recall how unbelievable simple it was to get past the very basic KYC rules on localbitcoins and by simply providing the most basic information you were able to get a nearly unlimited withdrawal cap by simply providing something that looked like an ID card or passport. I don't believe that they even really checked to make sure that it is actually you seeing as how your username and what not can be anything you want it to be. I know several people that submitted a stock image of a passport photo page of a non-existent person, and it was approved. Basically, I am thinking that a person probably never even looked at it and it was just a formality.
So while it is very disappointing that localbitcoins is shutting down, there are many other options just like it such as localcoinswap, hodlhodl, and Agoradesk. In a few weeks I think we will see all the sellers and buyers that were previously on localbitcoins start to move over there. It's not the end of the world and there are plenty of other alternatives that are based out of countries with less government meddling than Finland.
I don't believe the official reasons for closing up shop that they press-released but then again, I suppose we should just be happy that they didn't simply go dark and run off with all of the escrow funds! :)