Operating in regulation-heavy New York City, the metropolis where the taximeter has been running since 1907, has become the object of a Holy Grailesque quest for ride-hailing startups. The latest to get in is Lyft, the San Francisco-based ride-sharing startup best known for its friendly attitude--and those big, furry, bright-pink mustaches Lyft drivers strap on to the grills of their cars.

It's planning on turning on the motors in Brooklyn and Queens at 7 p.m. Friday.

This is despite the fact the company has been slapped with a cease-and-desist letter (read below) by the New York state Department of Financial Services. In it, Superintendent Benjamin Lawsky accuses the startup of "acting in bad faith." This comes after the city's Taxi and Limousine Commission issued a notice on July 9 threatening to impose hefty fines on Lyft drivers, and impound their cars.

"Lyft has not complied with TLC's safety requirements and other licensing criteria to verify the integrity and qualifications of the drivers or vehicles used in their service, and Lyft does not hold a license to dispatch cars to pick up passengers," the agency said. (Lyft responded with a lengthy document it calls a "safety committment," which you can read below.)

This hasn't rained on Lyft's parade--at least not yet. CEO and co-founder John Zimmer confirmed to Inc. Thursday that plans for a Friday launch were still underway, and that he was actively in conversation with regulators to form a compromise. After hanging up on a phone call, Zimmer said: "We are really engaged in the dialogue--that's what I was just doing--to satisfy any concerns they raise."

Asked whether Lyft would still launch this week in Brooklyn and Queens--the two most populous New York City boroughs--Zimmer said: "That's the plan; it's still the plan," noting the company has 500 local drivers lined up for the launch.

According to Crain's, the company "plans on holding a launch party Friday in trendy Bushwick with free booze, local-fruit popsicles, and a performance by rapper Q-Tip."

Lyft operates in 67 markets, including New York's Buffalo and Rochester, where it's been in service since April of this year.

In California, as in New York state, Lyft--along with several other ride-sharing and car-hailing startups, including Uber and SideCar--met strict regulatory opposition upon launching. Zimmer says his approach is to first examine the existing regulations, and then engage in a discussion with regulators or legislators to ensure his company's insurance and drivers' policies comply.

"We'd love to work on new rules for this new industry that take into account public safety, because we are already doing these things," he said.