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A group of citizens from Venezuela have filed a lawsuit against the promoters of an alleged cryptocurrency Ponzi scheme reported to have scammed over $30 million, Law360 reported.

The Venezuelans, who moved to the U.S. to “start a new life,” are suing Argyle Coin, a cryptocurrency which purports to be backed by diamond reserves. The cryptocurrency was promoted by three individuals, Jose Angel Aman, Harold Seigel and Jonathan Seigel, who also controlled two diamond mining companies.

According to reports, the cryptocurrency sold to investors was reported to be backed by their interests in the diamond mining sector, with claimed returns of 24% and more from investing in uncut diamonds.

In reality, the alleged Ponzi scheme is thought to have drawn some 300 victims, with the two firms, Eagle Financial and Natural Diamonds instead using new capital to repay earlier investors—the classic structure of so-called illegal Ponzi schemes.

The cryptocurrency has yet to be developed, despite investors being sold on the tokens which were allegedly backed by a $25 million reserve in diamonds and bonds.

The court documents suggest the companies also overstated their expertise within the sector, further misleading their investors by misrepresenting their ability to generate the returns they promised. It noted, “[Eagle Financial] and its principals overstated their experience in the diamond and jewelry businesses to lure investors into trusting [Eagle Financial] and its principals with their investment.”

The lawsuit is only the latest legal action to be raised in connection with Argyle Coin, with a number of regulators already pursuing those behind the scheme.

Most notably, the U.S. Securities and Exchange Commission (SEC) stepped in in May to prevent Argyle Coin from opening its initial coin offering (ICO), with an enforcement order to cease trading and freeze company accounts.

As part of the SEC enforcement action, all three companies related to Argyle Coin were targeted.

The case is another reminder for investors to exercise extreme caution when considering investing in cryptocurrencies and ICOs, with a significant number resulting in investors losing their invested capital.

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