In the basement of a dilapidated building in Yemen’s capital, Sanaa, Nasser Sharhan, 46, sits under the dim light of a candle. 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…