The US has imposed sanctions on Tornado Cash, a crypto “mixing service” that they say has laundered more than $7 billion over the past three years and helped North Korean state hackers evade US penalties.

The Treasury department said that Tornado Cash was regularly used by malicious cyber actors since it was founded in 2019.

The total allegedly laundered includes $455 million taken by state-sponsored North Korean hackers Lazarus Group in March, as well as $96 million from June’s hack of Harmony Horizon Bridge.

The designation, by the Office of Foreign Assets Control (Ofac), marks the latest attempt by US watchdogs to crack down on sanctions evasion using cryptocurrencies.

Authorities are paying close attention to so-called mixers because they obscure the trail of transfers that would typically be publicly accessible on the digital ledgers that underlie cryptocurrencies.

In May, Ofac imposed sanctions on Blender.io, another crypto mixing service, for its role in assisting Lazarus to launder over $20 million in “illicit proceeds”.

Tornado Cash was also used in moving at least another $7.8 million from last week’s hack of the Nomad exchange, Ofac said. Lazarus was sanctioned in the US in 2019.

“This action demonstrates that the US is dead serious about countering North Korea’s illicit crypto activity and will target actors in the crypto space that facilitate North Korean sanctions evasion,” said David Carlisle, vice-president of regulatory affairs at blockchain analysis company Elliptic.

“Despite criminals’ efforts to obfuscate their activity, the US has managed to blacklist one of the most prolific facilitators of cybercrime out there, dealing a major blow to criminals trying to cash out their funds,” he added.

Earlier this year, Tornado Cash said on Twitter that it used a tool from blockchain analytics business Chainalysis in order to block Ofac-sanctioned addresses from accessing the platform.

A senior Treasury official said on Monday that the designation sent a broader signal about the dangers involved in businesses such as Tornado Cash.

“We do believe that this action will send a really critical message to the private sector about the risks associated with mixers writ large,” the Treasury official said, adding that it was “designed to inhibit Tornado Cash or any sort of reconstituted versions of it to continue to operate”.

“Today’s action is the second action by Treasury against a mixer, but it will not be our last,” the official said.