HOUSTON – A state securities regulator has ordered an exploration and production company to stop accepting bitcoins as payment for investments in its Texas oil wells.
Texas Securities Commissioner John Morgan entered an emergency order on Monday against tiny Balanced Energy LLC, which claimed it was the first energy company to accept the virtual currency, according to the regulator.
"The price of digital currency is subject to extreme swings, which could affect the amount of money available for business operations," the regulator said in a statement.
Bitcoin is a digital currency that, unlike conventional money, is bought and sold on a peer-to-peer network that lacks central control. Its value has soared in the last year, and the total worth of bit coins minted is now about $7 billion.
Balanced Energy, based in the Dallas area, has drilled 33 wells on 10,500 acres in central Texas. According to the order, Balanced Energy is offering a stake in two exploration projects for about $31,000.
Executives at Balanced Energy were not immediately available to comment.
Also on Tuesday, the Financial Industry Regulatory Authority (FINRA) said recent events such as the bankruptcy of bitcoin exchange operator Mt. Gox have spotlighted some of the currency's risks. The brokerage industry watchdog group produced an investor alert titled "Bitcoin: More than a Bit Risky," warning that bitcoin can expose people to significant losses, fraud and theft.
(Reporting by Anna Driver; Editing by Terry Wade and David Gregorio)