In the basement of a dilapidated building in Yemen’s capital, Sanaa, Nasser Sharhan, 46, sits under the dim light of a candle.
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A former government employee whose salary was cut off years ago, he now lives on the brink of starvation, unable to afford even a sack of flour for his five children.
Just a few kilometers from Nasser’s cold bedding, internet servers operated by the Houthis are humming with activity, mining and channeling millions of digital dollars through cyberspace, directing them entirely toward the war effort and the interests of senior Houthi figures.
Traditional sanctions are no longer sufficient to curb this financial machine. The UN Panel of Experts’ latest report on Yemen, submitted to the Security Council in October 2025, said financial sanctions had only limited effectiveness.
This was largely due to the Houthis’ growing reliance on alternative channels and sophisticated smuggling networks, coupled with their complete control over Yemen’s telecommunications sector, which generates substantial revenues that are directed straight into financing the war.
Global trading loopholes allow the Houthis to run a crypto network
This virtual financial system would not have expanded without significant loopholes in global trading platforms.
Investigative reports published by The New York Times, The Wall Street Journal, and Fortune in late 2025 revealed internal documents indicating that Binance, the world’s largest cryptocurrency exchange, facilitated large financial flows benefiting entities linked to Iran because of compliance gaps.
Documents obtained by these media outlets showed that Hexa Whale, a Hong Kong-registered cryptocurrency trading firm, transferred approximately $500 million in Tether to a network connected to Iran, while total transfers from two Binance-linked accounts exceeded $1.7 billion.
Part of these funds reportedly reached digital wallets linked to Iran’s Islamic Revolutionary Guard Corps and the Houthis.
Amin Jameel, a digital analysis and networks engineer, told The Media Line that the Houthis do not operate randomly in cyberspace. Instead, they rely on carefully designed financial architecture centered on the TRON network and the stablecoin Tether or USDT.
According to Jameel, the choice of this network and currency is driven by two main factors. The first is the low transaction costs and high processing speed compared with the Bitcoin network. The second is that Tether is pegged to the US dollar, protecting Houthis funds from the extreme volatility of cryptocurrency markets and providing flexibility similar to cash dollars, but within a virtual environment beyond the oversight of international banking systems.
Jameel added that the laundering and liquidation cycle of these funds comprises three technical stages.
The process begins by receiving transfers via temporary digital addresses that are regularly created and rotated to avoid detection and tracking. The funds are then routed through exchanges operating under limited regulatory oversight or platforms that do not require strict identity verification procedures.
The third and final stage is “cashing out on the ground,” where local and international exchange networks serve as a critical link, converting digital tokens into cash in local or foreign currencies and distributing them directly to support frontlines, purchase weapons, or acquire real estate and foreign citizenships for Houthis abroad.
To understand how this network operates in practice, a technical officer at YemenNet, the public telecommunications company in Sanaa, who spoke on condition of anonymity, said that the Houthis directly exploit the company’s infrastructure and servers by directing computing power and large volumes of data traffic toward Bitcoin and cryptocurrency mining operations for the benefit of influential figures and Houthi entities.
Wider impact of this digital money laundering network on Yemen
This intensive and unlawful use of network resources has further strained an already fragile infrastructure. According to the officer, it is the real reason behind the continued deterioration of internet quality and the cripplingly slow connection speeds experienced by Yemenis.
It has also diverted electricity originally allocated to telecommunications infrastructure to power the mining facilities attached to it.
It is worth noting that technical teams from the Chinese telecommunications company Huawei are present in Yemen to maintain and upgrade telecommunications networks under commercial contracts.
The officer alleged that this technical cover may, in some cases, be used to equip servers capable of handling the massive data loads required for mining operations without attracting suspicion. However, these specific allegations could not be independently verified as of the publication of this report.
The Houthis digital activities are not limited to external financial support. Their financial machine has extended into international shipping routes in the Red Sea and the Bab al-Mandab Strait.
Reports from international media, including Germany’s Deutsche Welle public news broadcaster, suggest that the Houthis have imposed what it describes as “safety fees” on certain cargo vessels, shipping agents, and insurance companies in exchange for guarantees that they will not be targeted by drones or missiles.
The significance of this scheme lies in the requirement that payments be transferred directly to temporary digital wallets, providing the group with immediate liquidity that is difficult to trace or freeze through the conventional SWIFT banking system.
The Houthis employ extortion and blackmail to maintain the network
Faheem Hassan, a local cryptocurrency broker and trader in Sanaa, told The Media Line that the Houthis have imposed strict oversight on the digital wallets of businesspeople and local traders operating in areas under their control.
According to Faheem, they are regularly subjected to extortion, forced to pay levies, and to surrender portions of their profits under threat of asset confiscation or arrest.
Hassan added that the Houthis now possess extensive information about local traders in the cryptocurrency market and did not rule out the possibility that some may be recruited for future operations.
At a time when the United Nations classifies Yemen as the location of one of the world’s worst humanitarian crises, invisible blockchain networks have been sustaining a parallel reality, one in which hundreds of millions of dollars in cryptocurrency flow through digital channels to finance drone manufacturing and purchase weapons.
It is perhaps the starkest paradox of Yemen’s war: a population living below the poverty line while a de facto authority accumulates transnational wealth at the click of a button and directs it toward the war effort.