Peer-to-Peer Exchange LocalBitcoins Updates ToS, ID Verification “May Be Required”

  • Peer-to-peer bitcoin exchange LocalBitcoins has recently revealed it’s updating its Terms of Service on May 25.
  • Per the company, its updated ToS mean users may be required to verify their ID with the company in specific situations, including if they are under investigation or trade over certain limits.

Peer-to-peer cryptocurrency exchange LocalBitcoins has recently updated its Terms of Service (ToS), in a move that may see the company ask users for their IDs in specific situations, effectively compromising anonymity.

According to the company’s updated ToS, the company may enforce ID verification “in some situations,” which include the detection of authorized access and account recovery as, presumably, security measures.

Other situations in which LocalBitcoins may ask its users to verify their ID include “trading over certain volume limits,” fraud investigations, and allowing users to advertise on the platform. The company’s post reads:

“It is our top-most priority to ensure that LocalBitcoins is a safe and securebitcoinmarketplace [sic] and that no one is able to use our service for money laundering or other unlawful activities. Most fraud on LocalBitcoins stems from users attempting money laundering. We believe that taking a strict stance in this regard is in the interest of our users and important for our brand as a trustworthy marketplace.”

LocalBitcoins

LocalBitcoins was founded back in June 2012 in Finland, and has been one of them most popular peer-to-peer bitcoin trading platforms since then. Its users have been able to use the platform in a somewhat anonymous manner, as no ID verification was necessary. While the platform gave users the ability to verify their IDs so other users would trust them, it wasn’t a requirement.

Notably, this year various traders who claim to have been trading “significant” amounts of BTC were reportedly asked to verify their ID with the company in order to keep using its platform. Over time, various LocalBitcoins traders have been arrested for various reasons, including running unlicensed money services businesses and money laundering.

In light of these developments, various users on Reddit speculate remaining anonymous on the platform will no longer be possible once these changes come into effect, on May 25. The changes are partly based on the European Union’s General Data Protection Regulation (GDPR), a regulation brought forth to limit data harvesting, and allow users to own their identity rights online.

The peer-to-peer exchange will now also require individuals to only have one account. Those who are under 16 years old will no longer be allowed to use the platform.

Overstock CEO Sells Shares in His Company to Invest in Blockchain Projects

Patrick Byrne, the chief executive officer of Overstock.com (OSTK), has recently lashed out at investors who questioned his sale of 900,000 of his ‘founders shares’ in the company. Justifying his move, he revealed he needed the funds to invest in blockchain projects.

According to Business Insider, Byrne recently sent a letter to shareholders after the company’s stock prices plunged over 21% this week to their lowest since 2012, after he revealed he sold 500,000 of his shares earlier this week.

On Friday, the CEO revealed he sold an additional 400,000 shares, meaning he sold over 15% of his stake in the company. Although Overstock’s shares recovered on Friday, May 17, Byrne’s letter to shareholders was notable. In it, he wrote:

I simply had to supplement my nominal salary with stock sales in order to fulfill personal commitments to invest personally in blockchain projects such as Medici Land Governance, along with a need to meet charitable pledges.

The CEO added that he doesn’t plan on giving such an explanation again, justifying that he owes shareholders “staying within the law and not making decisions based on inside information, not explanations of my life and projects outside Overstock.”

He noted that the “unanticipated stir” caused by his sale was unexpected, and added “I had no idea that shareholders would demand explanations of why and how I might want to use my cash derived from my labor and my property to pursue my ends in life.”

Byrne is notably Overstock’s largest shareholder, and noted he told investors a year ago he would be making “significant sales” to fund different projects, including those related to blockchain technologies and, presumably, cryptocurrencies.

In fact, the libertarian sold 775,000 of his shares in September of last year, before this week’s sale. The stock’s price has fallen roughly 90% from its record high in January of 2018, when Overstock was benefitting from its cryptocurrency ventures and accompanying the cryptocurrency market’s performance.

In November of last year, Byrne revealed he had plans to sell Overstock’s retail business and go “all-in” on cryptocurrencies and blockchain technology. The CEO’s plan would see the company focus on its fully-owned subsidiary Medici Ventures, which has been invested in blockchain-related startups, after selling its retail business.

Overstock's price performance over the last two yearsSource: Yahoo Finance

Byrne has notably been battling short sellers targeting Overstock, as the firm competes with the likes of eBay and Amazon. Financial analytics firm S3 Partners has estimated short bets against it stand at $157 million, or 50% of its float. This makes it more targeted by short sellers than 99% of companies in the U.S.

Despite the company’s performance on exchanges, Overstock has since launched its tZERO security trading platform, and was one of the first companies to pay a “portion” of its taxes using bitcoin in Ohio.