LOCKPORT (TNS) — A state Supreme Court judge signed a final order ordering US Bitcoin to shut down a cryptocurrency mining facility in Niagara Falls and pay the city fines exceeding $1 million.
Justice Edward Pace signed the order Friday after weeks of contentious negotiations between attorneys for Niagara Falls and US Data Technologies Group Ltd. and US Data Mining Group Inc., which does business as US Bitcoin, about the wording of the final order. The order enforces an earlier ruling by Pace that found US Bitcoin in contempt of an order from another state’s Supreme Court judge that had told the company to shut down.
Pace also ruled that if US Bitcoin continued to operate, 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.
At Pace’s direction, attorneys representing the city drafted an order for him to sign that would enforce his ruling. Lawyers who prepare a ruling for the court routinely share it with opposing counsel before it is signed.
The attorney representing US Bitcoin, John Bartolomei, has reportedly repeatedly raised objections “to each proposed draft order,” effectively stopping it from taking effect. With the order now signed by Pace, it can be implemented immediately.
Bartolomei has indicated that 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 US Bitcoin continues to operate the facility, unless they are blocked by the appeals court.
Falls Mayor Robert Restaino said he was pleased with Friday’s development.
– The order confirmed what the judge originally ordered, said the mayor. “It was pretty clean.”
Attorneys for Niagara Falls had asked a judge to find US Bitcoin in contempt of court for violating an order directing a shutdown. The city charges that the operation is “a public nuisance” and engages in “ongoing violations” of the city’s zoning plan.
A restraining order was issued on December 9 ordering US Bitcoin to halt all forms of cryptocurrency mining pending the outcome of a hearing on the city’s request for a preliminary injunction.
When American Bitcoin failed to close, the city’s lawyers asked for a contempt judgment.
There are two other cryptocurrency mining operations in Falls. City attorneys have noted that one of those facilities, operated by BlockFusion, immediately shut down operations when Falls filed for the preliminary injunction.
BlockFusion has applied for an operating permit under the terms of the city’s high energy use zoning code regulations.
Another facility has been closed since the summer due to a fire in an electrical substation on the property.
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