LocalBitcoins, a peer-to-peer trading service, allows Bitcoin trading without the use of a structured bid/ask order book. Thus, buyers and sellers complete trades via bank wire and escrow, with some trades even happening in person. However, as per the company, the source of the problem was identified as a ‘feature powered by third-party software’.
Even though cryptocurrency doesn’t need to be held on the platform for buyers, sellers may need to use LocalBitcoin’s internal wallet system for the platform’s escrow services. This means that sellers pay a 1% fee for every completed trade, while the service is free for buyers. Because of LocalBitcoin’s internal wallet system, it is unknown whether wallets were compromised or if Bitcoin was stolen during the hack.
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