Texas Tells Company to Stop Investments Using BitcoinDarrell Preston
Texas regulators ordered an energy company to stop accepting Bitcoin for investments in oil and natural-gas wells, the first action of its kind by a state securities commissioner.
Balanced Energy LLC, in the Dallas suburb of Southlake, was directed to stop selling unregistered securities using the digital currency, Texas Securities Commissioner John Morgan said yesterday in a statement.
The order reflects concern that investors using Bitcoin might not get their money back, said Bob Webster, a spokesman for the Washington-based North American Securities Administrators Association. Webster described the order as the first of its kind.
Bitcoin is the most popular of a group of digital currencies that have no central issuing authority, use a public ledger to log every transaction and employ a network of volunteer computers to ensure coins cannot be spent twice.
The Texas commissioner said Balanced Energy and its president, Kirk Johnson, failed to disclose to investors the risks of using Bitcoin to purchase working interests in wells located in West Texas. The price of digital currency is subject to extreme swings, according to the statement.
The company offered the investments at the Texas Bitcoin Conference March 5 and 6 in Austin, and on social media and Web pages, according to the statement.
Johnson didn’t immediately respond to a message left at his office seeking comment. Robert Elder, a spokesman for Morgan, declined to comment beyond the statement.