after a seller has funded the transaction; can they withdraw the funds?
Can the seller withdraw the funds, or the buyer?
With LocalBitcoins, the word "reserved" could replace the term "funded".
So a seller reserves funds for the transaction. The seller can cancel the transaction at any time though, and get the reserved funds back. Essentially a funded transaction simply proves that the wallet for the seller's account does have X bitcoins in it (and confirmed).
To make the funds available to the buyer, the seller needs to release the funds. This can be done via SMS (using the release code given previously to the seller) or through the web interface. Once the funds are released, they appear in the buyer's wallet and are already confirmed so can be withdrawn immediately.
If the buyer has internet access, the wallet can be monitored and managed via the web interface. If the buyer does not have internet access, then the seller provides the release code. The seller only would know the release code once the funds were truly released.
