Srinagar, Aug 3 (IANS): Jammu and Kashmir's State Investigation Agency (SIA) on Wednesday searched houses of seven persons in connection with a case of terror financing through Bitcoin trading, sources said.

"In connection with FIR number 12/22, these searches were carried out in Baramulla, and Kupwara districts in Kashmir division and Mendhar in Poonch district of Jammu division," a source said.

Sources said although the investigation is at an initial stage, yet the mastermind has been found in Pakistan who has been sending money to terrorists with active support of Pakistani intelligence agencies and Pakistan-based terrorist outfits.

"Identity of the Pakistani mastermind has been comprehensively established, but is not being revealed so that other agents in the loop are not alerted," a source said.

Houses searched on Wednesday include those of Zahida Bano, Ghulam Mujtaba, and Tamjeeda Begum, all in Kupwara district, Yasir Ahmad Mir and Sharief-ud-Din, both in Baramulla, and of Farooq Ahmad and Imran Choudhary, both in Poonch district.

Sources added that slush money that originated in Pakistan has reached these persons.

"The transfer of money has been layered to prevent end to end tracing. Accounts in the middle of the layered transactions are located outside J&K. Loopholes in Bitcoin trading have been effectively exploited to shadow these transfers," a source said.