The United States has frozen the assets of cryptocurrency service Tornado Cash, accusing it of helping cyber criminals to launder money.
More than $7 billion worth of cryptocurrency, including from North Korean hackers, has been laundered through Tornado Cash since 2019, a senior Treasury Department official said.
Tornado Cash is a so-called mixer, which blends streams of digital currency to mask their origin and improve anonymity.
The move generally bars Americans from using the service.
Jerry Brito, from Washington DC-based cryptocurrency think tank CoinCenter tweeted that the move "appears to be sanctioning a tool that is neutral in character and can be put to good or bad uses like any other technology."
The US Treasury said the Lazarus Group, a North Korean government-backed group of hackers, has moved at least $455 million through Tornado Cash.
The group is already under US sanctions, having carried out a number of other data breaches, including a hack of Sony Pictures in 2014.
Tornado Cash was also used to launder about $100 million from a hack of virtual currency firm Harmony in June, the Treasury said.
Pyongyang denies the accusations, and North Korea's mission to the United Nations in New York has not commented.
Tornado Cash founder Roman Semenov tweeted that his account on code-sharing site GitHub had also been suspended, and asked: "Is writing an open source code illegal now?"
Dr Aaron Lane, a senior research fellow at the Royal Melbourne Institute of Technology blockchain innovation hub told ABC News that the move could leave honest crypto investors exposed.
"It's a tool which people use legitimately. Can you use it illegitimately? Yes. But I'd be worried about honest users who will not be able to withdraw funds or worse ... possibly face criminal sanctions," he said.
"That's probably not the intention, but it is one of the consequences.
"Crypto is actually very easy to track. Whereas bank accounts are protected, in a crypto explorer with a few clicks of a button, I can see where you've transferred funds. Without these tools, your privacy is at risk."
Despite being asked to make changes, criminal activity on Tornado Cash had continued, the Treasury official said, triggering Monday's decision to impose measures.
In May, the Treasury also targeted another service, Blender, the first case of a mixer facing sanctions.
Hackers have long plagued crypto platforms, and other experts say Tornado Cash has played a role.
"Tornado is a popular and important tool for cybercriminals and state-backed hacking groups," said Dr Tom Robinson of cryptocurrency analytics firm Elliptic.
"In total, (our) analysis shows that at least $1.3 billion in proceeds of crime, such as ransomware, hacks and fraud, have been laundered through Tornado Cash."
Dr Aaron Lane said that the US move represented "regulation through enforcement action".
"The regulatory settings in the US and elsewhere are such that there is uncertainty, and the real solution is to have legislators pass bills in Congress."
Reuters/ABC
