From UAVs to Sanctions Evasion: How the Houthis Use Crypto

Today (April 17, 2023), the United States Department of the Treasury’s Office of Foreign Assets Control (OFAC) imposed sanctions on Yemen-based International Bank of Yemen YSC, including key individuals, for its financial support to Iran-backed Yemen-based group the Houthis. This reinforces the US’s intensified economic measures against the group, such as OFAC imposing sanctions targeting the group’s financial infrastructure on April 2, 2025, which included eight cryptocurrency addresses linked to the Houthis. TRM Labs’ on-chain analysis of these addresses shows over USD 900 million in outflows to high-risk and OFAC-sanctioned entities, including a Russian broker selling unmanned aerial vehicles (UAVs) and anti-UAV equipment.

Since March 15, 2025, the US has launched a series of air strikes on the Houthis in response to the group targeting merchant vessels in the Red Sea. The US administration has also reinstated the Houthis’ designation as a Foreign Terrorist Organization (FTO). The US’s financial measures involve specifically targeting the Houthis' cryptocurrency activities due to their role in financing militant operations and evading international sanctions. 

Furthermore, in December 2024, the US Treasury sanctioned cryptocurrency wallets connected to Sa'id al-Jamal, an Iran-based financier associated with both the Houthis and Iran's Islamic Revolutionary Guard Corps-Qods Force (IRGC-QF).

Who are the Houthis? 

The Houthis, formally known as Ansar Allah, are a political and armed movement in Yemen primarily based in the country's northwest. In 2014, they took control of large parts of Yemen, including the capital Sanaa, with almost 70% of the population in areas under their control. The Houthis have established governance structures in the areas they control, overseeing local administration, security, and justice systems. 

Their primary sources of revenue include taxation and customs duties, as well as funds generated through smuggling operations, particularly of fuel and weapons. They have experimented with digital currencies and cryptocurrency mining, partly to evade international sanctions and to fund their ongoing civil conflict and governance effort; however, the impact of those efforts has been fairly limited.

How the Houthis use crypto

As international sanctions against the Houthis and their Iranian backers have tightened, focus on their use of cryptocurrency has increased, especially given its role in helping fund its operations, procure military equipment, and sustain its governance in its territory in Yemen. Their overall crypto activity remains relatively limited compared to more established terrorist groups such as Hamas and ISIS, who have utilized other crypto-related methods such as crowdfunding to finance their operations. 

Learn more about how Hamas has used crypto to fund their operations

Read the post on TRM's blog →

However, the recent US sanctions targeting the Houthis have exposed a network of facilitators and digital wallets. The group has used this network to move funds through a web of high-risk and sanctioned entities, including Russian brokers, and Hezbollah-linked facilitators. This highlights how decentralized technologies are increasingly being leveraged by sanctioned actors to bypass traditional financial controls.

Why OFAC has sanctioned the Houthis

In the past year, the Houthis have emerged as the most prominent member of Iran’s so-called “axis of resistance,” Iran’s proxies and allies that also include Hezbollah, Hamas and Shia Iraqi militias. This is partly due to Israeli military operations significantly degrading Hamas’ and Hezbollah’s operational capacities following the October 7, 2023 attacks on Israel. 

The Houthis claim their ongoing attacks on commercial ships in the Red Sea are in retaliation against Israeli actions in Gaza and support for the Palestinian cause. These assaults have disrupted global shipping routes, raised maritime insurance costs, and escalated regional tensions.

OFAC has repeatedly highlighted how Iranian entities rely on cryptocurrency to circumvent sanctions and move funds to these groups. OFAC has sanctioned individuals and exchanges tied to the IRGC, revealing that cryptocurrency was used to transfer money to procure weapons and for operational expenses benefiting the Houthis. 

On April 2, 2025 OFAC sanctioned a network of Houthi financial facilitators and procurement operatives who coordinated with Sa’id al-Jamal to procure tens of millions of dollars of commodities from Russia, including weapons and stolen Ukrainian grain, to ship to Houthi-controlled regions of Yemen. Within this designation, OFAC also identified eight cryptocurrency wallet addresses associated with the Houthis, updating its Specially Designated Nationals and Blocked Persons (SDN) List. 

TRM Labs’ on-chain analysis of the eight cryptocurrency addresses designated shows over USD 900 million in outflows, including to addresses associated with a Russian broker selling unmanned aerial vehicles (UAVs) and anti-UAV equipment, among other military gear on behalf of Chinese manufacturers. The intermediary address that facilitated a number of transactions to the designated addresses also sent tens of millions to financial facilitators linked to Hezbollah. Furthermore, there are outflows from the designated addresses to other high-risk and OFAC-sanctioned entities, including Sa’id al-Jamal and now-defunct Russian exchange Garantex.

Although TRM is unable to determine the exact nature of those transactions, the Houthis’ UAV and anti-UAV capabilities have drastically improved over the last few years. The group has managed to down a dozen US drones since October 2023, with the most recent one allegedly occurring this month. 

Both the OFAC-designated addresses, as well as the intermediary address seen in the graph above have sent and received funds from addresses on Israel’s National Bureau for Counter Terrori Financing (NBCTF) seizure of cryptocurrency lists, including addresses that were linked to Hezbollah.

On December 19, 2024, OFAC identified and added five cryptocurrency wallets linked to Sa’id Al-Jamal to the SDN List, highlighting the evolving tactics employed by the Houthis and their affiliates to exploit digital currencies. According to TRM Labs, collectively, these five designated addresses received over USD 330 million in total inflows. Additionally, TRM noted these addresses used a wide variety of services, both centralized and decentralized, to facilitate some of their transactions. 

The Houthis’ use of cryptocurrency mining

In addition to using cryptocurrency to procure weapons and fund operations, the Houthi movement in Yemen has leveraged cryptocurrency mining as part of their financial strategies amid the ongoing civil conflict. Evidence indicates that the Houthis have been involved in mining decentralized cryptocurrencies since at least 2017. 

In their efforts, the Houthis have reportedly utilized services like Coinhive — a now-defunct JavaScript-based cryptocurrency miner — to mine cryptocurrencies directly through YemenNet, the country's primary internet service provider under their control. This approach has allowed them to harness YemenNet users’ computing power, effectively generating cryptocurrency without the need for extensive local hardware infrastructure.

Cryptocurrency activities by Yemen population under Houthi control

Internet infrastructure challenges, low financial literacy about digital assets, and the lack of broad merchant acceptance contribute to relatively limited cryptocurrency adoption among the local population in Houthi-controlled territory. The legal status of cryptocurrencies is also largely undefined with no specific legislation in place. However, there are signs of growing interest and usage driven primarily by necessity rather than speculation. The ongoing conflict and economic instability in the country have severely disrupted traditional banking services, making it difficult for people to send or receive money. 

In some instances, local Yemenis have turned to peer-to-peer (P2P) cryptocurrency transactions to move funds across borders or conduct remittances. This can be particularly appealing for families dependent on remittances from the Yemeni diaspora, who need faster, more reliable ways to transfer money home without paying exorbitant fees or running the risk of local banks being unable to dispense cash.

For those who use cryptocurrencies in Yemen, the ability to bypass the disruption in local financial services offers a modicum of financial resilience, especially as banks can be difficult to access or are simply inoperable due to the ongoing conflict.

Website traffic suggests that among individuals in Yemen engaging with cryptocurrency services, decentralized finance (DeFi) platforms account for the majority of web traffic, constituting over 63% of observed activity. The interest in DeFi services may reflect the appeal of systems that allow users to transact without intermediaries, particularly where local banking institutions are inaccessible or unreliable. 

Global, centralized exchanges account for 18% of web traffic, potentially serving users who are able to onboard via more structured platforms. Although these interactions do not necessarily imply high transaction volumes, they reinforce that for some individuals in Yemen, decentralized infrastructure may provide a necessary alternative to traditional payment rails.

Local exchanges in Houthi-controlled Yemen

Currently, exchanges that focus exclusively on cryptocurrency are not very common in Houthi-controlled territory. Instead, some money service businesses operating in the region offer cryptocurrency services, in addition to regular financial services. 

Increasing sanctions against the Houthis will likely drive growing adoption of cryptocurrency in Yemen. For example, in the three-month period following the Biden administration relisting the Houthis as a Specially Designated Global Terrorist (SDGT) in January 2024, a Yemen-based cryptocurrency exchange tracked by TRM experienced a 270% increase in overall volume. However, it eventually returned to pre-spike levels. It spiked again by 223% in the three months following the election of US President Donald Trump and his administration subsequently reinstating the Houthis’ designation as an FTO.

Looking ahead

Given the intensifying international sanctions on the Houthis and their primary backer, Iran, the group’s use of cryptocurrency is likely to grow in both scale and sophistication. As traditional financial avenues become increasingly restricted, decentralized digital currencies offer an alternative that is less susceptible to oversight and harder to trace. Iran's own experience leveraging cryptocurrency to circumvent sanctions and support proxy groups provides both a model and potential technical assistance to the Houthis, who may increasingly turn to crypto to fund operations, procure materials, and sustain their governance activities in Yemen.