P2P Exchange, LocalBitcoins, is Shutting Down

LocalBitcoins, the world’s oldest and largest peer-to-peer Bitcoin marketplace, has announced that it will be stopping its trading services, citing the difficult crypto environment.

“We are sad to share that, regardless of our efforts to overcome challenges during the ongoing very cold crypto winter, we have regretfully concluded that LocalBitcoins can no longer provide its Bitcoin trading service,” the company said while asking customers to withdraw their funds as soon as possible.

“We encourage all customers to withdraw their funds from LocalBitcoins and we ask you to proceed with withdrawing the Bitcoins from your LocalBitcoins wallet. You have 12 months to withdraw, however of course, we encourage you to proceed withdrawing sooner.”

Timeline for discontinuing the Bitcoin trading service:

• 2023-02-09: Suspension of new sign ups
• 2023-02-16
  • Suspension of trading on LocalBitcoins
  • Suspension of using LocalBitcoins wallet (with exception of withdrawing one’s funds)
• After 2023-02-17: LocalBitcoins customers will only be able to log-in to withdraw their Bitcoins. The trading and wallet services will no longer be available at this point

LocalBitcoins, which was founded in 2012, has been a pioneer in providing a platform for bitcoin trading in emerging markets. It had estbalished a large lead over competitors such as Paxful and Binance P2P in the peer-to-peer trading space in emerging markets like Africa, Latin America and Russia, for example.

According to U.S authorities, Localbitcoins was one of the major bitcoin transferrers to Bitzlato, which was shut down by the US Financial Crimes Enforcement Network for allegedly being a huge conduit for money laundry and other cybercrimes. The US authorities also accused Bitzlato of assisting in bypassing sanctions against Russia.

However, Localbitcoins denied any collaboration or relationship with the besieged exchange while indicating that the P2P company had been regulated by the Finnish Financial Supervisory Authority  since 2019 and strictly followed Know Your Customer (KYC) and Anti-Money Laundering (AML) regulations.

According to Jukka Blomberg, Chief Marketing Officer at LocalBitcoins:

“Based on our data, there have practically been no transactions between LocalBitcoins and Bitzlato since October 2022 after we stopped serving Russian user accounts and accounts of users residing in Russia.”

Localbitcoins recorded some of its best trading performances before the crypto boom in 2017 but activity has been declining since, according to data above from Coin Dance.

Weekly trading volumes dropped below 1,000 BTC by February 2021, and the latest reported weekly trading volume was 283 BTC, equivalent to around $6 million.

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Global investor, Partech, has successfully raised €245 million ($263 million) in their first close for their second AfricaTech Fund, exceeding their goal of €230 million.

The partners at Partech initially aimed to raise a maximum of €230 million for their second fund, with a hard cap set at €280 million. However, the initial close of €245 million has exceeded these expectations.

“This would not have been possible without the trust and the support from our major existing investors. We are honoured that top-tier global institutions and strategic commercial investors have decided to back Partech Africa II,” said Partech Africa’s general manager, Cyril Collon.

Investors contributing to the fund so far are as follows:

• Bertelsmann
• South Suez Capital
• European Investment Bank
• International Finance Corporation (IFC)
• Dutch Development Bank (FMO)
• British International Investment
• Bpifrance Investissement
• Proparco
• DEG – Deutsche Investitions – und Entwicklungsgesellschaft

The Partech Africa II fund aims to invest between $1 million to $15 million per startup, providing capital support ranging from seed to growth stage.

It’s worth mentioning that the investment range for Partech Africa II is larger compared to the first fund which invested €0.5 million to €5 million ($418,000 – $4.2 million based on current exchange rates) per startup.

The first Partech Africa fund, which launched in 2018 with €125 million, has supported 17 African startups in 9 different countries. Given that the successor fund has exceeded its funding goal, it appears that African venture capital is attracting more global attention compared to previous years.

Some of the African startups that Partech has previously invested in are:

• Tugende
• TerraPay
• Freterium
• Gebeya
• Nomba
• Vendease
• TradeDepot
• Djamo
• MoneyFellows
• Almentornet
• Reliance Health

The Partech Africa fund portfolio played a significant role in attracting 10% of Africa’s total venture capital investment in 2021 and 2022. To maintain its reputation and provide valuable insights into the African market, the fund has released in-depth reports on Africa’s venture capital and technology ecosystem.

“African tech companies are now raising $6 billion annually validating our early commitment beyond any expectations. Still, we know there are many more champions to build in Africa and we are ready to support them,” said Dème.

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