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According to LocalBitcoins, transactions on its website from darknet markets declined by 70%

June 26, 2020

LocalBitcoins, a major peer-to-peer cryptocurrency exchange (P2P), has reportedly managed to significantly reduce the amount of criminal funds on its platform in 2020.

According to LocalBitcoins, the P2P platform decreased by more than 70% in darknet market transactions between September 2019 and May 2020.

Jukka Blomberg, Head of Marketing at LocalBitcoins, told Cointelegraph The decline is in response to the fight against money laundering and the Know Your Customer provisions adopted by the platform in September 2019.

According to LocalBitcoins, transactions on its website from darknet markets declined by 70%According to LocalBitcoins, transactions on its website from darknet markets declined by 70%

The calculations are based on a blockchain analysis by the leading cryptocurrency analysis company Elliptic and on LocalBitcoins’ own “clustering tools”.

The decline remains remarkable despite the Bitcoin trade collapse in 2019

A 70% decline in transactions related to the Darknet could seem insignificant as LocalBitcoins saw a massive drop in the amount of Bitcoin (BTC) in 2019. The weekly Bitcoin trading volume on the exchange plummeted, according to Coin Dance, from almost 14,000 BTC in January 2019 to around 4,000 BTC in January 2020.

Between September 2019 and May 2020, however, LocalBitcoins saw only a 20% decrease in BTC trading volume and was below an average of 5,000 BTC to 4,000 BTC in weekly trading.

Global BTC trading volume at LocalBitcoins

Global BTC trading volume at LocalBitcoins. Source: coin dance

LocalBitcoins has seen healthy growth in recent months

Along with the apparent advances in fighting illegal transactions on its platform, LocalBitcoins has seen a performance boost, said Blomberg. “If we look back over the past two to three months, we can already see a healthy growth trend that is occurring again in all regions and indicates high demand.”added the executive.

LocalBitcoins said that Your new customer registrations have increased by more than 50% since the beginning of 2020from around 4,000 new registrations per day to over 6,000. “The rapid growth in the number of new customers is of course a sign of good demand and great future potential for LocalBitcoins,” said Blomberg.

According to analysts, LocalBitcoins is an important place for illegal transactions

Some cryptocurrency analysts argue that LocalBitcoins enables a large number of illegal financial transactions.

According to a recent CipherTrace report LocalBitcoins received over 99% of the fines on Finnish stock exchanges in the first five months of 2020. The company also claims that Finnish exchanges have the highest proportion of illegal BTCs for the third year in a row, with 12% of all BTCs coming directly from criminal sources.

In early 2020, threat intelligence company IntSights released another report, claiming that P2P platforms like LocalBitcoins contribute to money laundering. The startup said that such illegal activities are often associated with a significant lack of regulations.

As a Finnish company LocalBitcoins only works with the Finnish authorities on cryptocurrency regulations, Blomberg said. Last year LocalBitcoins said Finland was actively working on new laws to amend the anti-money laundering law in accordance with European Union anti-money laundering regulations.