A new report from blockchain firm TRM Labs has shared worrying news. It shows how the Houthi group in Yemen used cryptocurrency to avoid US sanctions. The group moved over $900 million in crypto through eight addresses linked to them. These funds were used to get around US rules and buy weapons and other military gear and the Houthis are using crypto to keep their operations going even with financial pressure from the United States.
The Houthis’ Use of Crypto
The Houthis are a political and armed group. They have controlled most of Yemen since 2014. Over time, they gained global attention. This happened because they attacked commercial ships in the Red Sea. They say these attacks are a reply to Israel’s actions in Gaza. In response, the US took action. It labeled the group as a Foreign Terrorist Organization (FTO). The US also placed strong economic sanctions to block their access to money.
But even with these actions, the Houthis have found another way to keep going. They are now using cryptocurrency. Blockchain data shows they use crypto to avoid the sanctions. They also use it to pay for military needs, like drones and other high-tech weapons. TRM Labs says eight crypto addresses linked to the Houthis moved large amounts of money. Some of this money went to risky groups and people already on US sanctions lists.
High-Risk Transactions and Military Equipment
According to TRM Labs, these funds have been sent to various sources, including a financier based in Iran, and a Russian broker with ties to a Chinese company that manufactures unmanned aerial vehicles (UAVs) and anti-UAV equipment. The transactions suggest that the Houthis have been using these funds to purchase military hardware, such as drones and other unmanned systems, which have significantly improved their military capabilities in recent years.
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The increased use of UAVs (unmanned aerial vehicles) by the Houthis aligns with reports of the group using these drones in military operations. The Houthis have become well-known for their use of drones in attacks, and it seems that cryptocurrency has become a key enabler in obtaining the technology they need for these operations.
TRM Labs’ findings are significant because they show how easily groups can use cryptocurrencies to bypass traditional financial systems and evade international sanctions. This is not the first time that groups under US sanctions have turned to crypto to fund their operations.
Crypto Mining in Yemen
What makes the situation in Yemen unique is that the Houthis have also been involved in crypto mining. This is the process of using computing power to generate cryptocurrency, which can then be used or sold. According to the report, the Houthis have been mining cryptocurrency since 2017. However, their mining operations have been relatively small and low-cost, often relying on crypto mining services like Coinhive, which allowed them to mine cryptocurrency using Yemen’s internet service provider, YemenNet.
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While the Houthis’ mining operations may not be as large as those of other organizations, they are still generating significant amounts of crypto, which adds another layer to their ability to fund their operations without relying on traditional banks or financial institutions.
More people in Yemen are using cryptocurrency. This is part of a growing trend in the country. Many are choosing DeFi, or decentralized financial services, to send and receive money. Banks in Yemen are hard to use. They are limited and have many rules. Because of this, people are using DeFi and peer-to-peer services instead. These help them move money and pay across borders. TRM Labs says 63% of crypto use in Yemen is on DeFi platforms. Only 18% is on normal crypto exchanges.
