Where it came from
The company's own announcement of a new chief executive states it plainly: "LocalBitcoins.com was created as an easy way for anyone to have access to Bitcoin in 2012 by Jeremias Kangas." His brother Nikolaus ran the company as chief executive until September 2019, when Sebastian Sonntag took over and both brothers moved to the board.
The mechanism was an advertisement board with an escrow attached. A seller posted an offer naming a price, a currency and a payment method. A buyer took the offer, the seller's coins moved into escrow held by LocalBitcoins, the buyer paid by whatever means the two had agreed, and the seller released the escrow. That covered bank transfer, cash in person, mobile money and gift cards, and it worked in countries no exchange would touch, which is why the site mattered far more in Nigeria, Venezuela and Kenya than its size in Europe suggested.
The custody is the tradeoff. Escrow means a company holds the coins in the middle of every trade, and an account you can be locked out of. The Finnish trade register records LocalBitcoins Oy under business ID 2855415-2, registered on 1 February 2018, which is a later entity than the 2012 service. In November 2019 the company announced that the Finnish Financial Supervisory Authority had registered it as a virtual currency provider, a status that from that month was required to operate in Finland at all.
How it ended
The company closed the trading service in stages it published itself: new sign-ups stopped on 9 February 2023, trading and the wallet stopped on 16 February 2023, and from 17 February customers could log in only to withdraw. The company still exists and still processes withdrawals. Its notice says maintenance fees stopped on 1 July 2025 and will stay stopped "until the company has obtained a MiCA license". The marketplace itself is not coming back in the form it had, which is why this entry is marked defunct.