Introduction
The illicit extraction and trade of natural resources is a growing issue that afflicts many biodiverse regions across the globe. This problem involves a wide variety of activities but broadly incorporates the illegal removal and trafficking of resources such as fuels, minerals, wildlife, forestry, and fishery. Even extremist organisations have engaged in these activities in order to fund their operations. At the peak of its territorial power in 2015, the Islamic State was estimated to be generating approximately $40 million per month from the illegal sale of oil extracted from areas of Iraq and Syria under its control.
Although the illicit exploitation of natural resources by extremist groups is a long-standing concern, the role of climate change as a ‘threat multiplier’ may increase the significance of these activities as a source of profit for many such organisations. As climate change accelerates environmental degradation and resource scarcity in many regions, competition for natural resources will likely intensify, particularly in regions already afflicted by conflict. This may create opportunities for extremist groups to appropriate an increasingly lucrative revenue stream further and exercise a potentially powerful lever of strategic control over their areas of operation.
Yet, while the profits generated from the illicit natural resource trade can be substantial, extremist groups cannot profit from this activity without the ability to launder their money. Therefore, by using cryptocurrency, extremist groups can effectively transfer and consolidate the funds derived from this revenue stream, without many of the constraints presented by more traditional financing methods.
Although direct evidence of these organisations exploiting cryptocurrency for the purpose of illicit natural resource trade remains limited, there is a growing body of work illustrating the plausibility of this process. Extremist groups across the globe have increasingly embraced the use of cryptocurrency, exploiting its decentralisation and assuming anonymity to avoid banking restrictions and transfer funds internationally. Simultaneously, evidence has emerged of criminal networks using this technology to launder funds derived from illicit natural resource exploitation. By examining evidence of criminal networks exploiting virtual currencies to manage the proceeds of illicit natural resource exploitation, this Insight will illustrate its potential as a powerful tool for extremist groups to achieve the same objective. It will also underline the confluence in the financing methods used by criminal networks and extremist groups.
Illicit Natural Resource Exploitation by Extremist Groups
Both the Sahel and sub-Saharan Africa have emerged as key hotspots for the illegal trafficking of natural resources by extremist groups. For instance, this practice currently forms a substantial portion of the income received by groups such as the Islamic State’s regional provinces in the Sahel, Central Africa, and Somalia. Though illicit resource trafficking is by no means limited to these groups, they have all participated in the exploitation of a variety of resources and, in doing so, have even reportedly displayed some limited cooperation with other extremist groups.
According to local reports, members of the Islamic State’s Somalian branch (IS-Somalia) are suspected of exploiting gold reserves in the Bari region. Many of the group’s foreign fighters are allegedly skilled in mining and mineral extraction, with Somalian intelligence officials suspecting that the illegally obtained gold and minerals are extracted by local labourers, either employed or coerced by IS-Somalia, before the goods are then traded for weapons. IS-Somalia’s activities follow a clear pattern of resource exploitation in Somalia, where Al-Shabaab has reportedly generated over $15 million per year from illegal charcoal sales. The United Nations has even suggested that IS-Somalia and Al-Shabaab have also collaborated with other extremist groups, such as Al-Qaeda in the Arabian Peninsula, in order to carry out their charcoal smuggling operations.
IS-Somalia is not alone in exploiting illegal gold mining to fund its violent activities. In February 2024, the US Treasury noted that the Islamic State’s affiliate organisation in the Democratic Republic of Congo (DRC), locally known as the Allied Defence Forces (ADF), was also participating in illegal gold mining and smuggling. Between $700 million and $1.3 billion worth of gold, minerals, timber, charcoal, and wildlife products, such as ivory, are believed to be smuggled out of the DRC by groups, including the ADF, each year. Similarly, the Islamic State in the Greater Sahara, the Islamic State’s regional representative active across Mali and the broader Sahel region, has, to a lesser extent, engaged in gold panning, smuggling, and poaching in order to raise funds.
These examples highlight the importance of natural resource exploitation as a financial tool for several extremist groups operating across Africa. Though the specific goods that each group seeks to exploit vary between regions, it is clear that the lucrative income generated by the illegal trade in natural resources is a powerful driver that funds, at least in part, the operations of these extremist groups.
Furthermore, these natural resources will become even more valuable as climate change intensifies. This may further heighten their illicit exploitation as a revenue stream for extremist groups and as a driver of conflict throughout much of Africa. For example, various non-state armed groups such as the M23 rebels, the Democratic Forces for the Liberation of Rwanda, and the ADF have participated in illegal coltan mining in the DRC, a material that is crucial for the production of electric vehicles and mobile phones. Demand for coltan is anticipated to double by 2030, demonstrating both the financial and strategic value of illicit natural resource extraction for extremist groups.
The Expansion of Cryptocurrency Use
As the illicit exploitation of natural resources has entrenched itself as a key source of financing for many of the Islamic State’s African provinces, cryptocurrency has also independently become an increasingly significant financial tool for these groups to raise, distribute, and store funds. This trend has been particularly prescient since many of the Islamic State’s established financing methods have been targeted by counter-terrorism forces. As the cryptocurrency research company Chanalysis has indicated, at least $24.2 billion worth of cryptocurrency was directed to criminal cryptocurrency wallet addresses in 2023, including those linked with terrorist financing networks.
Though Bitcoin was the first cryptocurrency initially promoted by the Islamic State, since 2020, the group has expanded its use of cryptocurrency and diversified the range of digital assets it seeks to use. Currently, the Islamic State favours stable-coins and privacy-focused tokens, often with a large market share, in order to hide their transactions. Cryptocurrencies such as Tether, Ethereum, Dogecoin, and Zcash have been used, while donations through Monero have been explicitly requested as the Islamic State crowdfunds from supporters based around the world. These international donations have been relayed through its propaganda outlets, notably the Voice of Khorosan, produced by the Islamic State’s Khorasan province (IS-K).
According to the US Department of the Treasury, the Islamic State has “significantly expanded” its use of cryptocurrencies since January 2024 to include its African affiliates. The Islamic State’s growing embrace of virtual assets likely reflects a growing recognition among senior leaders that these tools offer a discreet and effective means of preserving the group’s dwindling financial reserves amid sustained counterterrorism pressure. Additionally, cryptocurrencies provide a more secure way to transfer money between regional representative groups. For example, reporting suggests that the Al-Karrar office, a branch of the Islamic State General Directorate of Provinces based in Somalia, has provided IS-K with $25,000 worth of cryptocurrency each month.
“Operation Greed” and the Use of Cryptocurrency in Natural Resource Exploitation
The intersection between extremist groups and criminal organisations – often referred to as the “crime-terror nexus” – is a well-established relationship. These groups have employed similar tactics in parallel and, at times, blurred the lines that distinguish between their supposedly distinct activities. Accordingly, case studies from the criminal world where groups have used cryptocurrency to launder the proceeds of illicit natural resource exploitation provide some insight into how these two growing areas of extremist activity may align.
There is a long history of organised criminal groups earning funds from the illicit trade of natural resources. For instance, criminal gangs across Southeast Asia and increasingly Africa have responded to the growing demand for pangolin meat (a small, scaly mammal) and scales in China since the 1990s. Between 2010 and 2021, approximately 190 tonnes of illegally sourced pangolin scales were seized by the authorities. While the use of cryptocurrency has not been linked to the illegal trade of Pangolin products specifically, many of these organised crime groups have also sought to exploit technological developments by integrating cryptocurrency into their established money laundering avenues elsewhere. The very same borderless nature and potential privacy features that have attracted extremist groups to cryptocurrencies are also viewed as powerful tools by criminal gangs who seek to launder the wealth gained from the illegal trade of natural resources.
One case that highlights the confluence of cryptocurrency and illicit resource exploitation can be observed through an investigation launched by Brazilian police in February 2021. The police inquiry, titled “Operation Greed,” uncovered that Gana Gold, a company operating in the Pará state of Brazil, had been illegally mining and exporting gold without the required permits.
The criminal gang behind Gana Gold had set up a series of shell companies across the country in order to launder the money gained from this illegal mining. While traditional cash-based money laundering techniques were mainly used, the gang was also found to have created their own cryptocurrency in order to transfer their profits to associates without relying on the traditional banking system and explain the rising valuation of the companies involved in the criminal activity. This activity was conducted through Binance, the world’s largest crypto-exchange platform, which has frequently been accused of facilitating money laundering by criminal organisations and terrorist group financing. It is estimated that between 2019 and 2021, more than $3 billion was laundered through the Gana Gold criminal network, with this novel use of cryptocurrency playing a notable role in these operations.
Beyond Brazil, a similar convergence of illicit resource exploitation and cryptocurrency use has emerged through criminal gangs operating in other parts of South America and across Southeast Asia. In Venezuela, gold smuggling, largely to the US, has provided criminal gangs and the Maduro government with a consistent source of income. However, this illegal gold mining has also caused significant deforestation, and the use of mercury in the extraction process has led to the contamination of sensitive ecosystems. The Drug Enforcement Agency has warned that drug traffickers and money launderers involved in this trade “are increasingly incorporating virtual currency” into their ongoing money laundering activities. The recent adoption of Bitcoin cash machines has drastically streamlined this process. Likewise, reports indicate that South-Asian transnational criminal networks have also expanded their use of cryptocurrencies such as Tether to launder the proceeds from an extensive range of illegal activities, including the smuggling of wildlife and natural resources.
Conclusion and Policy Recommendations
The examples highlighted throughout this Insight clearly illustrate the ongoing use of cryptocurrency by organised criminal groups in order to support their participation in the highly profitable, and environmentally damaging, natural resource trade. Cryptocurrencies have enabled these criminal networks to rapidly transfer their funds to accomplices and evade traditional oversight mechanisms more freely than through more established financing methods. Though some extremist groups have already adopted the use of cryptocurrencies, it is these characteristics – decentralisation, speed, and heightened privacy – which may provide a powerful tool for such organisations, prompting the further integration of cryptocurrency-based money laundering into their existing illicit natural resource exploitation operations.
Though the use of cryptocurrency by extremist groups for the explicit purpose of illicit natural resource trafficking remains unconfirmed, the changing conditions brought about by climate change may result in the increasing prominence of this financing method. As the impact of climate change intensifies, goods such as gold, minerals, and wildlife products may become more highly sought after, either due to their increasingly limited supply or potential use in new technologies. Accordingly, extremist organisations, such as the Islamic State’s African affiliate groups, may seek to take advantage of this opportunity to boost their finances and strategic position.
Addressing this nascent issue must be prioritised as disrupting the financial channels which sustain extremist groups is among the most effective means to diminish their capacity to operate. Although cryptocurrencies have been adopted by extremist groups for their perceived anonymity and independence from traditional financial networks, many cryptocurrency transactions occur on public blockchains. Strengthening blockchain analysis capabilities through international cooperation on financial intelligence, therefore, offers a significant opportunity to disrupt the complex, often transnational, financial networks which support extremist groups across the globe. Additionally, though most centralised exchanges rigorously enforce Know-Your-Customer measures, penalties for those exchanges which fail to implement these policies, enabling money laundering by extremist and criminal organisations alike, must be strictly enforced by both domestic and international law enforcement and financial oversight agencies.
Dan Brunton holds a master’s degree from King’s College London and works as a security consultant and independent researcher. His research focuses on Salafi-jihadist terrorism, with an emphasis on the dynamics that influence intergroup alliances among terrorist networks, particularly the Islamic State and its affiliate groups in Africa.