Officials in Texas have sounded a warning to oil companies over trading in bitcoin after blocking an exploration firm which looked to be would be the first to accept the electronic currency.
Balanced Energy, based in Dallas, said it would accept bitcoins from investors, though it would look to convert the payments to traditional currency to pay for business operations.
But the head of the Texas Securities Commission has obtained a cease and desist order against the oil firm and president Kirk Johnson after claiming it had not warned investors of the risks of using the digital currency.
“The price of digital currency is subject to extreme swings, which could affect the amount of money available for business operations,” the state security board said in a statement.
“The order requires Balanced Energy and Johnson to stop selling unregistered securities and making an offer to investors that contains a statement that is materially misleading and could deceive the public.
Bitcoin, founded in 2009 by developer Satoshi Nakamoto, uses peer-to-peer payments and cryptography for transferring money electronically. The value of the currency has dramatically soared in recent months, with $7billion of bitcoins now minted, but it has also come under scrutiny over concerns it can be used for illegal transactions and it is seen as more volatile than gold or traditional currency.
According to the order, the oil firm was offering investors a 6.25% working interest in two exploration projects in Runnels County, Texas, for a $31,000 payment, and offering a first year return of between 76% and 118%
Balanced Energy, which says it currently has 20 producing wells across the state, has 30 days to ask for a hearing from the state commissioner over the order.