[Trading with Stolen Cash]

The answer—and Allah is the granter of success—according to the scholars of the madhhab is that if the cash (fulūs) is not gold or silver, then nothing is required of him except to return its like, and its profits are lawful for him. But if what was stolen or usurped was gold or silver, then: if he purchased “on liability” (to the debtor’s account) and paid [later] with the usurped gold/silver toward what he had purchased, he owns what he bought and its principal and profit are lawful to him. If, however, he purchased with the very usurped coins—such as saying at purchase, “I have bought this item from you with these coins,” and the seller accepted—then in this case the profit is forbidden to him.
Thus, if the capital was one hundred and he sold for one hundred and twenty, the hundred is lawful to him and the twenty is unlawful. If he then buys with the one hundred and twenty, the profit on the hundred is lawful to him and the profit on the profit is unlawful to him—so the profit on the twenty, and the profit on its profit, and the profit on the profit of its profit, and so on, are forbidden; while the profit on the hundred and the profit on its profit … etc., are lawful.
But if the purchase was “on liability,” as when he says, “I have bought this from you for one hundred,” and the seller says, “I have sold,” then the one hundred and its profit, and whatever profit accrues thereafter, are lawful to him. Thus have the scholars of the madhhab set it forth.
What is unlawful to him of the profit as mentioned in the foregoing example—he must give it in charity.
I say: The proof for what is mentioned in this chapter is the hadith of the sheep that was slaughtered for the Messenger of Allah—May Allah bless him and his family and grant them peace—without the permission of its owners; the Prophet—May Allah bless him and his family and grant them peace—ordered them to give it in charity … etc. This indicates that what is acquired by a prohibited route must be given in charity.
So if the usurper buys with the very usurped cash and he realizes a profit, he must give that profit in charity—and likewise the profit of that profit.
Source: Min Thimār al-ʿIlm wa al-Ḥikmah vol.2