One of the oldest peer-to-peer (P2P) cryptocurrency exchange LocalBitcoins struggles to maintain its reputation as users reported that their accounts were suspended without any prior warning. As a reminder, numerous users previously left the platform as a result of significant KYC implementation.
Based in Finland, LocalBitcoins represents a global P2P exchange known for its ability to provide users with anonymous transactions on a decentralized platform. However, the exchange significantly changed in the past year. Some of the newest controversies include users reporting that accounts from regions such as the Middle East, Africa, and Asia received suspensions without prior warning.
In a report by Forbes published on Jan 25, it was revealed that some of the oldest reports regarding accounts being suspended came to light a week ago. Users from countries such as Nigeria, Syria, Pakistan, Iraq, and Afghanistan had their accounts suspended and claimed that they could no longer manage their crypto assets.
While numerous news agencies inquired about the sudden suspensions, no official response was received at the time of writing. Nevertheless, a recent tweet by the exchange revealed that the platform will undergo planned website maintenance which should last up to an hour.
LocalBitcoins pressured by new EU AML law?
According to some views, the exchange likely fell under the pressure of the European Union’s new 5th Anti-Money Laundering Directive (5AMLD). One of the famous cases of regulatory pressure experienced by the new AML law was seen with Deribit, a cryptocurrency derivatives platform which moved to Panama as a result of new regulations.
As for LocalBitcoins, some users on Reddit reported that after having their accounts suspended, they could no longer access their Bitcoin holdings. Additionally, the users reportedly received the following message on the exchange:
“Customers residing or otherwise located in the following countries are required to have an enhanced due diligence process. The countries are defined by EU commission: Afghanistan, American Samoa, The Bahamas, Botswana, Democratic People’s Republic of Korea, Ethiopia, Ghana, Guam, Iraq, Libya, Nigeria, Pakistan, Panama, Puerto Rico, Samoa, Saudi Arabia, Sri Lanka, Syria, Trinidad and Tobago, Tunisia, US Virgin Islands, Yemen.”
Users are required to wait two weeks before receiving access to their wallet
According to other users on Reddit, who reported their issue on the LocalBitcoins subreddit, they are required to wait 14 days before receiving access to their account’s wallet. In an attempt to move past the time limit, a user requested that the exchange deletes his account. After making the request, the user reportedly gained access to his wallet and was able to withdraw his Bitcoins.
In his post on Reddit, the user noted:
“It’s really sad to see that even though I have a fully verified Tier 2 status, my account has been put on a forced holiday probably because I am in one of the targeted countries. […] I really hope I do get my bitcoins back after 14 days. I have submitted an account deletion request and received a confirmation email from your support team.”