Niagara Falls, N.Y., Considers Bitcoin Settlement


 ​(TNS) — The City of Niagara Falls has reached a tentative settlement agreement with a Buffalo Avenue-based cryptocurrency mining facility that was shut down last month by a state supreme court justice who found the operators in contempt of another judge’s court order.

The settlement, which is scheduled to be considered for approval by city lawmakers during tonight’s council meeting, would require the facility’s operator, U.S. Bitcoin, to comply with a series of standards for noise reduction and permit applications. It would also require the operator to compensate the city in several ways, including an upfront, non-refundable $50,000 fee to be paid upon execution of the agreement.

Under the terms of the settlement, which must be approved by the city council, the city would, within 15 days of the agreement’s effective date, take the legal steps necessary to vacate the temporary restraining order and contempt order as they relate to the city’s enforcement action against U.S. Bitcoin. In return, U.S. Bitcoin would agree to withdraw any outstanding legal actions it has against the city.

Early in March, State Supreme Court Justice Edward Pace signed a final order directing U.S. Data Technologies Group Ltd. and U.S. Data Mining Group Inc., doing business as U.S. Bitcoin, to shut down its Buffalo Avenue facility and pay the City of Niagara Falls punitive fines in excess of $1 million.

The move followed weeks of contentious negotiations between attorneys for the city and U.S. Bitcoin over the wording of the final order. Pace’s order enforced a previous ruling by the judge that found U.S. Bitcoin in contempt of an order from another State Supreme Court justice, Frank A. Sedita III, that directed the company to stop operating its facility while lawyers for the city sought a preliminary injunction to force the owners 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 facility in violation of the order issued by Sedita, and found the company in contempt.

At the time, Pace also ruled that if U.S. Bitcoin continued to operate the 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.

The settlement to be considered by city lawmakers would put an end to the legal squabbling between the sides and allow U.S. Bitcoin to resume operations under a series of conditions, including:

–Limiting noise production from the facility to no more than 65 decibels, a level both parties agree would be in compliance with the city’s new high energy usage overlay district.

–Construction of a “noise dampening wall” at the property for the “purpose of maintaining the standard of sound from its operation” as required under the city’s overlay district rules.

–Work with the city to select a “third party,” “independent monitor” who would 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 usage overlay district. The proposed deal caps U.S. Bitcoin’s costs for “any and all applications” at $100,000.

In addition to the $50,000 upfront fee, under the settlement U.S. Bitcoin would 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 U.S. Bitcoin’s commitment to amicably resolve all disputes presently existing between the parties.”

The agreement would also require U.S. Bitcoin to reimburse the city for “attorneys’ fees and costs” tied to its enforcement action against the company. The reimbursement amount listed in the settlement is $180,000.

Ned Perlman, a Falls attorney with the law firm Magavern, Magavern and Grimm, which served as one of two outside legal firms representing the city as part of the enforcement action, said the agreement would not only require U.S. Bitcoin to cover the bulk of the city’s legal costs but would also result in additional compensation for the city.

From a resident standpoint, Perlman said he believes the settlement will address the noise concerns that have been voiced by homeowners near the Buffalo Avenue facility since U.S. Bitcoin began operating.

“We never lost focus on the residents through the negotiations,” Perlman said.

The city council will meet at 6 tonight at city hall, 745 Main St.

(C) 2023 the Niagara Gazette (Niagara Falls, N.Y.). Distributed by Tribune Content Agency, LLC.


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