Justice Edward Pace has instructed lawyers for the city of Niagara Falls and for U.S. Data Technologies Group Ltd. and U.S. Data Mining Group Inc, doing business as U.S. Bitcoin, to meet with him to resolve an ongoing dispute over a draft order that would enforce a previous ruling by Pace that found the cryptocurrency mining company, which operates a facility on Buffalo Avenue, in contempt of an order from another State Supreme Court justice that directed the company to shutdown its operations.
The ruling by State Supreme Court Justice Frank A. Sedita III directed U.S. Bitcoin to stop operating it's Buffalo Avenue facility while lawyers for the Falls seek a preliminary injunction to force the cryptocurrency mining company to comply with a new zoning ordinance governing high-energy use industries. Pace ruled on Jan. 25 that U.S. Bitcoin was deliberately operating its cryptocurrency mining facility in violation of an order issued by Sedita and found the company in contempt.
Pace also ruled that if U.S. Bitcoin continued to operate their facility, 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.
"If, by January 31, (the cryptocurrency mining operation) has not shut down, then a check should be delivered to the city of Niagara Falls on February 1 for $540,000," Pace said in his ruling from the bench.
However, Pace also directed lawyers representing the city to draft an order for him to sign that would enforce his ruling. In such cases, the attorneys who draft an order routinely share it with opposing counsel.
In this case, the attorney representing U.S. Bitcoin, John Bartolomei, has reportedly repeatedly raised objections "to every proposed draft order."
The March conference is expected to settle what the contents of the judicial order should be and immediately implement it. Bartolomei has indicated he intends to appeal any order from Pace to the State Supreme Court Appellate Division Fourth Department in Rochester.
However, in setting the conference date, Pace reportedly reaffirmed his core decision and reaffirmed that the fines against U.S. Bitcoin will continue to accrue.
The fines now exceed $750,000.
The Gazette has learned that lawyers for the city have submitted up to four potential orders for Pace to sign. Bartolomei reportedly has submitted a proposed draft order as well.
Attorneys for the Falls had asked Sedita, who recently transferred some of his caseload to Pace, to find U.S. Bitcoin in contempt of court for violating his TRO that directed them to shut down their Buffalo Avenue facility, which the city charges is creating "a public nuisance" and engaging in "ongoing violations" of the city's Zoning Code.
Sedita issued the restraining order on Dec. 9. It directed U.S. Bitcoin to cease "engag(ing) in "any and all forms of cryptocurrency mining" pending the outcome of a hearing on the city's request for a preliminary injunction that seeks to shutdown three cryptocurrency mining facilities currently operating in the city "unless and until" they comply with a recently enacted series of amendments to the city's Zoning Code that govern the location and operation of high-energy use industries such as data centers and crypto-mining facilities.
When U.S. Bitcoin failed to shut down its operations, city lawyers asked Sedita to find the company in contempt. Pace made that finding after taking over the case from Sedita.
There are two other cryptocurrency mining operations in the Falls. City lawyers have noted that one of those facilities immediately shut down its operations when the Falls filed its motion for the preliminary injunction.
That facility has since begun the process of applying for permits to re-open. A second facility has been shuttered since the summer because of a fire in an electrical substation on its property.
© 2023 the Lockport Union-Sun & Journal (Lockport, N.Y.). Distributed by Tribune Content Agency, LLC.
