Popular Bitcoin (BTC) exchange platform LocalBitcoins is allegedly suspending user accounts with little fanfare, citing an "enhanced due diligence process."

Finland-based LocalBitcoins, one of major global peer-to-peer (P2P) crypto exchanges, has reportedly suspended user accounts in some countries in Africa, the Middle East and Asia without alert, with some users beingness unable to withdraw their Bitcoin, Forbes reports Jan. 25.

LocalBitcoins gave no public statement on the matter when the kickoff reports came about a week ago

According to the report, the get-go complaints started coming in last week, with LocalBitcoins users in countries like Afghanistan, Iraq, Nigeria, Syrian arab republic, and Islamic republic of pakistan claiming that they were not able to withdraw their Bitcoins without deleting their accounts.

Equally LocalBitcoins has made no official annunciation on the matter, Cointelegraph has asked the visitor to provide a comment merely did not receive an immediate response. This story will be updated should they respond. Meanwhile, LocalBitcoins tweeted on Jan. 28 that they have some planned website maintenance work, which reportedly lasted for one hour.

Apparent connection with Eu's new AML law

Post-obit the suspensions, one of the alleged afflicted users of LocalBitcoins suggested on Reddit that the action must be connected with the European union's new Anti-Coin Laundering (AML) law, which is known every bit fifth Anti-Money Laundering Directive (5AMLD). In a Jan. 28 post on Reddit, the user claims that new accounts users are not able to transport Bitcoin that they received in their wallets, while customer back up is not responding "at all."

In a divide Jan. 22 personal weblog post, the Redditor reported the issue in particular, noting that those users who got their LocalBitcoins accounts suspended were shown the following bulletin:

"Customers residing or otherwise located in the following countries are required to have an enhanced due diligence process. The countries are divers by EU commission: Afghanistan, American Samoa, The Bahamas, Botswana, Autonomous People's Republic of Korea, Ethiopia, Ghana, Guam, Iraq, Libya, Nigeria, Pakistan, Panama, Puerto Rico, Samoa, Kingdom of saudi arabia, Sri Lanka, Syrian arab republic, Trinidad and Tobago, Tunisia, U.s.a. Virgin Islands, Yemen."

LocalBitcoins users have to wait for 14 days to go admission to their BTC

Other Redditors reported that the affected LocalBitcoins users volition accept to expect for at least 14 days to delete their accounts in guild to withdraw their Bitcoin. One Redditor purportedly had to request the deletion of his account in society to get access to his crypto, noting that he was likely to have been affected by the new unannounced policy by LocalBitcoins:

"It's really sad to run into that fifty-fifty 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 actually hope I do become my bitcoins dorsum after fourteen days. I have submitted an account deletion request and received a confirmation email from your support team."

Some affected users claim that their accounts were banned for no reason

Another Redditor, who claims to represent a crypto-related firm in Lebanon, reported that LocalBitcoins suspended his account without sending any email before blocking the account. Nader Dirany, a co-founder of BuyBitcoinLeb, complained that the account suspension has led to termination of his whole business despite his having set up the business relationship almost 3 years ago as well as verified his account with the passport.

The BuyBitcoinLeb's co-founder also said that LocalBitcoins provided no clear reason for suspending his account. Co-ordinate to an email screenshot seen by Cointelegraph, the platform wrote:

"Unfortunately, we cannot provide detailed information about the reasons behind the break of your account. Our conclusion is last and cannot be revoked. You are no longer allowed to merchandise on LocalBitcoins. Any new business relationship will be blocked."

Meanwhile, Bitcoin is becoming more and more important in Lebanese republic amid the intensifying economical crunch in the land, Dirany said in an electronic mail to Cointelegraph. He considered LocalBitcoins' (LBC) decision to suspend his business relationship unfair:

"Sincerely I consider the LBC's decision is unfair and unjustified, and a catastrophe on my business concern; especially that I resigned on September-2019 from my position as "Primary Consultant" in Utilities & Energy every bit to focus on having an online business in Cryptocurrency where LBC platform is considered one of its principal pillars."

LocalBitcoins trading volumes dropped over 50% from June 2022 to early January 2022

Founded in 2022, LocalBitcoins has emerged as one of the most popular Bitcoin exchanges for assuasive safe P2P transactions with directly between the retailer and the customer and without involvement by any 3rd political party. However, the popular exchange started seeing a notable driblet in trading volumes afterwards the exchange abruptly terminated the pick for users to perform local cash trades in June 2022. As LocalBitcoins continued to tighten its AML policies in 2022, its global Bitcoin trading volumes take been gradually dropping to touch on a multi-yr low in early on 2022. According to data from Bitcoin statistics website Coin Dance, global Bitcoin trading volumes on LocalBitcoins dropped more than than 50% since September 2022 by early January 2022.

Global weekly LocalBitcoins volume

Global weekly LocalBitcoins book. Source: Money Dance

LocalBitcoins' proprietary AML and Know Your Client policies are not the only reason for the massive decline of BTC trading on the platform. On January. 10, the European Matrimony's AML police force 5AMLD officially came into force, forcing some companies to end or relocate operations before the beginning of 2022.

In an interview in Nov 2022, LocalBitcoins CEO Sebastian Sonntag said that he expected that the KYC situation would become more than stable "in the following weeks," projecting that "improvements in the verification flow should also influence positively."

Update: Jan. 29 fourteen:30 UTC: This article has been updated to incorporate new comments received after initial publication.