LOCKPORT (TNS) — A State Supreme Court justice signed a final order directing U.S. Bitcoin to shut down a cryptocurrency mining facility in Niagara Falls and pay the city punitive fines that exceed $1 million.
Justice Edward Pace signed the order on Friday after weeks of contentious negotiations between attorneys for Niagara Falls and U.S. Data Technologies Group Ltd. and U.S. Data Mining Group Inc., doing business as U.S. Bitcoin, over the wording of the final order. The order enforces a previous ruling by Pace that found U.S. Bitcoin in contempt of an order from another State Supreme Court justice that had directed the company to shut down.
Pace also ruled that if U.S. Bitcoin continued to operate, he would impose fines of $10,000 a day through Feb. 1 and then increase the fines to $25,000 a day until the cryptocurrency mining stopped. The justice imposed the fines, dating back to Dec. 9, because that was the date when Sedita first issued his temporary restraining order (TRO) that directed U.S. Bitcoin to stop operating while the suit seeking the preliminary injunction worked its way through the courts.
At Pace’s direction, lawyers representing the city drafted an order for him to sign that would enforce his ruling. Attorneys who draft an order for the court routinely share it with opposing counsel before it is signed.
The attorney representing U.S. Bitcoin, John Bartolomei, reportedly repeatedly raised objections “to every proposed draft order,” effectively stalling it from taking effect. With the order now signed by Pace, it can be immediately implemented.
Bartolomei has indicated he intends to appeal the order to the State Supreme Court Appellate Division Fourth Department in Rochester. If Bartolomei appeals, the fines against his client will continue to accrue if U.S. Bitcoin continues its operate its facility, unless they are blocked by the appeals court.
Falls Mayor Robert Restaino said he was pleased with Friday’s developments.
“The order confirmed what the judge originally ordered,” the mayor said. “It was pretty clean.”
Attorneys for Niagara Falls had asked a judge to find U.S. Bitcoin in contempt of court for violating an order that directed a shutdown. The city charges the operation is “a public nuisance” and engages in “ongoing violations” of the city’s zoning.
A restraining order was issued Dec. 9, directing U.S. Bitcoin to cease all forms of cryptocurrency mining pending the outcome of a hearing on the city’s request for a preliminary injunction.
When U.S. Bitcoin failed to shut down, city lawyers asked for a contempt ruling.
There are two other cryptocurrency mining operations in the Falls. City lawyers have noted that one of those facilities, operated by BlockFusion, immediately shut down its operations when the Falls filed its motion for the preliminary injunction.
BlockFusion has applied for an operating permit under the terms of the city’s high-energy use zoning code regulations.
A second facility has been shuttered since the summer because of a fire in an electrical substation on its property.
