Turkish authorities ordered the liquidation of about 130 investment funds worth $17bn after alleged Ponzi-like schemes affected half a million people. The government has promised accountability, but investors still don't know how they’ll be repaid. The crisis has also exposed links between fund managers, businesses and figures connected to Turkey’s ruling elite.
President Recep Tayyip Erdogan addressed the controversy on Monday. “Whoever lays a hand on the nation’s rights, assets or legal interests will face us and the state,” he said, pledging action against those responsible for market manipulation and fraudulent trading schemes. Authorities have given themselves six months to sell the funds’ assets and repay investors. Experts are pessimistic about how much money people will recover, and many won't receive the inflated gains shown in their holdings.
The state steps in
The funds concentrated their holdings in illiquid stocks with low free floats, where relatively few shares were available for trading and prices could be easier to inflate. Tera investment fund generated a return of more than 1,500 percent over the past year, which the report described as “totally illogical by any market calculation or method.” Now the promised remedy depends on the same state authorities selling assets and deciding how repayment will work. That mechanism isn't decided.
Justice Minister Akin Gurlek announced on Friday that authorities had frozen the assets of 46 legal entities, 18 funds and 42 individuals after reviewing fund outflows between 1 July and 16 September. Travel bans were imposed on 37 suspects. The measures blocked asset transfers, sales, large cash withdrawals and other transactions that could reduce assets available for recovery. They also required capital market instruments to be frozen and suspicious transactions reported to judicial authorities.
The broad order reached investment firms, financial services companies, insurers, food producers and other businesses, including Tera Yatirim, Pusula Yatirim, Ulusoy Un, Tatilbudur, Enuygun, Astor Enerji, IC Ictas, Emin Evim, Turkiye Hayat ve Emeklilik, Yayla Agro, Turkiye Sigorta and Katilimevim. It prompted fears of severe disruption when Borsa Istanbul reopened on Monday; authorities reversed the order on Sunday. Astor Enerji said restrictions and freezing orders affecting it had been lifted and its operations continued uninterrupted. Turkish stocks nevertheless fell 2.38 percent on Monday.
Connections under scrutiny
Fatma Betul Sayan Kaya, a deputy head of the ruling Justice and Development Party (AKP) and family minister from 2016 to 2018, resigned on Sunday. The opposition accused her of making substantial profits from share sales shortly before the funds crisis triggered a major stock market sell-off on 16 September. Her disputed trades primarily involved shares in Ozata Denizcilik, a shipbuilder involved in Turkish navy projects.
Tera Group and Pusula, firms accused of involvement in the alleged schemes, had politically connected figures on their boards. Tera and others denied wrongdoing. One of Erdogan’s chief advisers served on the board of Tera Portfolio Management until January 2026; another former presidential adviser remained on the board until the crisis erupted. His brother, a former ambassador, also sat on boards of several companies under Tera Holding.
Tera Group chairman Emre Tezmen was arrested on charges of running a Ponzi-like scheme. Until his arrest, he also served on the board of the Central Securities Depository of Turkey (MKK), the official institution responsible for recording, safekeeping and transferring securities and other financial instruments. Tezmen denied wrongdoing. Muhammed Yariz, chairman of Pusula Portfolio, was also recently arrested; he was known for past work within the AKP.
Who answers for the losses?
Tera’s brokerage reportedly controlled 95 percent of Ozata Denizcilik’s shares at one point. The shipbuilder’s valuation surged to $5bn, exceeding that of major Turkish companies including automaker Ford Otosan and steel producer Eregli. An Ozata Denizcilik board member arrested on Monday was the son of a former member of the banking regulator that approved Tera Investment Bank, a sister company of Tera’s brokerage business. He was also the son-in-law of a deputy finance minister, whose ministry is tasked with helping resolve the crisis. He denied the charges and said he had surrendered voluntarily to clear his name.
Rumours in Ankara suggested other senior officials might have turned a blind eye to questionable activity or invested themselves; the report said those claims remained unverified. Erdogan was due to chair a committee meeting on Tuesday to discuss next steps. Some analysts said the government might sacrifice more politically connected figures to contain public anger; others disagreed about the scandal’s possible effect on the 2028 presidential election. “Erdogan will have to genuinely go after this to show that he doesn't forgive such transgressions, because the political cost could be worse than people imagine,” an Ankara insider said. The funds’ liquidation has been ordered. A repayment plan hasn't.