NIAGARA FALLS (TNS) — A state Supreme Court judge has now scheduled a conference in early March to decide what will be the content of a court order seeking to fine and shut down the operations of a cryptocurrency mining company in Falls.
Justice Edward Pace has instructed attorneys for the City of Niagara Falls and for US Data Technologies Group Ltd. and US Data Mining Group Inc, which does business as US Bitcoin, to meet with him to resolve an ongoing dispute over a draft order that would enforce an earlier ruling by Pace that found the cryptocurrency mining company, which operates a facility on Buffalo Avenue , in contempt of an order from another state’s Supreme Court judge ordering the company to shut down operations.
The ruling by state Supreme Court Justice Frank A. Sedita III ordered US Bitcoin to stop operating its Buffalo Avenue facility while lawyers for Falls seek a preliminary injunction to force the cryptocurrency mining company to comply with a new zoning ordinance regulating high-energy-use industries. Pace ruled on January 25 that US Bitcoin knowingly operated its cryptocurrency mining operation in violation of an order issued by Sedita and found the company in contempt.
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.
“If, by Jan. 31, (cryptocurrency mining) has not shut down, a check should be delivered to the city of Niagara Falls on Feb. 1 for $540,000,” Pace said in his bench ruling.
However, Pace also instructed attorneys representing the city to draft an order for him to sign that would enforce his ruling. In such cases, the lawyers preparing an order routinely share it with opposing counsel.
In this case, the attorney representing US Bitcoin, John Bartolomei, reportedly repeatedly raised objections “to each proposed draft order.”
The March conference is expected to decide what the content of the court order should be and immediately implement it. Bartolomei has indicated that he intends to appeal any ruling by Pace to the State Supreme Court Appellate Division Fourth Department in Rochester.
However, in setting the conference date, Pace reaffirmed its core decision and confirmed that the fines against US Bitcoin will continue to accrue.
The fines now exceed $750,000.
The Gazette has learned that attorneys for the city have submitted up to four potential orders for Pace to sign. Bartolomei also reportedly submitted a proposed draft order.
Attorneys for the Falls had asked Sedita, who recently transferred some of his caseload to Pace, to find US Bitcoin in contempt of court for violating his TRO ordering them to close their Buffalo Avenue facility, which the city charges creates “a public nuisance” and engage in “ongoing violations” of the city’s zoning code.
Sedita issued the restraining order on December 9. It ordered US Bitcoin to cease “engaging in ‘any and all forms of cryptocurrency mining’ pending the outcome of a hearing on the city’s request for a preliminary injunction seeking to shut down three cryptocurrency mining facilities currently operating in the city” with less and until” they comply with a recently passed series of changes to the city’s zoning code that governs the location and operation of energy-intensive industries such as data centers and crypto mining facilities.
When American Bitcoin failed to shut down its operations, city attorneys asked Sedita to find the company in contempt. Pace made the discovery after taking over the case from Sedita.
There are two other cryptocurrency mining operations in Falls. City attorneys have noted that one of those facilities immediately shut down operations when Falls filed the petition for the preliminary injunction.
This facility has since begun the process of applying for permission to reopen. Another facility has been closed since the summer due to a fire in an electrical substation on the property.
(c)2023 Niagara Gazette (Niagara Falls, NY)
