City tentatively reaches settlement with Buffalo Avenue bitcoin operator
April 4 – The City of Niagara Falls has entered into a preliminary settlement agreement with a Buffalo Avenue cryptocurrency mining facility that was shut down last month by a state Supreme Court judge who found the operators in contempt of another judge’s court order.
The settlement, which is on the agenda for Wednesday’s city council meeting, will require the facility’s operators, US Bitcoin, to comply with a series of noise abatement standards and permit applications. It would also require the operators to compensate the city in several ways, including a $50,000 nonrefundable upfront fee upon completion of the agreement.
Under the terms of the settlement, which must still be approved by the City Council, the city would take the legal steps necessary to vacate the temporary restraining order and contempt order as they apply to the city’s enforcement action against US Bitcoin within 15 days of the agreement’s effective date.
In early March, state Supreme Court Justice Edward Pace signed a final order ordering US Data Technologies Group Ltd. and US Data Mining Group Inc., which does business as US Bitcoin, to shut down the Buffalo Avenue facility and pay the city of Niagara Falls a penalty. fines in excess of $1 million.
The move followed weeks of contentious negotiations between lawyers for the city and US Bitcoin over the wording of the final order. Pace’s order enforced an earlier ruling by the judge that found US Bitcoin in contempt of an order by another state Supreme Court judge, Frank A. Sedita III, ordering US Bitcoin to halt operations at its Buffalo Avenue facility while lawyers for Falls sought a preliminary injunction to force the cryptocurrency mining company to comply with a new zoning ordinance regulating high-energy industries.
Pace ruled on January 25 that US Bitcoin knowingly operated its cryptocurrency mining operation in violation of the order issued by Sedita and found the company in contempt.
At the time, Pace also ruled that if US Bitcoin continued to operate their facility, he would impose fines of $10,000 per day through February 1 and then increase the fines to $25,000 per day until cryptocurrency mining stopped. The judge imposed the fines, which date back to December 9, because that was the date Sedita first issued its temporary restraining order (TRO) ordering US Bitcoin to cease operations while the lawsuit seeking the preliminary injunction worked its way through the courts.
The settlement, to be considered by city lawmakers during the council meeting, will end the legal tussle between the two sides and allow US Bitcoin to resume operations under a number of conditions, including:
— To limit the noise output from the plant to no more than 65 decibels, a level both parties agree will be consistent with the city’s new overlay district with high energy consumption. The agreement requires both parties to select a “third party,” “independent monitor” who will be responsible for ensuring compliance with the city’s noise level standards.
—Submit completed applications for all “permits, variances and approvals” needed to comply with the city’s new high-energy overlay district. The proposed agreement caps US Bitcoin’s charges for “any and all applications” at $100,000.
— Proceed with the construction of a “noise-absorbing wall” on the property to “maintain operational noise standards” required by the city’s overlay district rules.
In addition to the $50,000 upfront fee, under the settlement, US Bitcoin will be required, within 30 days of the effective date of the agreement, to pay the city a $100,000 compliance fee for the purpose of “demonstrating US Bitcoin’s commitment to amicably dissolve.” all disputes for the time being existing between the parties.”
The agreement will also require US Bitcoin to reimburse the city for “attorneys’ fees and costs” related to its enforcement action against the company in the amount listed in the agreement as $180,000.
