Turkish authorities ordered the liquidation of about 130 investment funds worth $17bn earlier in September. They stand accused of running Ponzi-like schemes, leaving half a million people caught in the fallout.
Many affected people are ordinary investors facing a long wait to learn how much of their money, if any, they’ll see again. Authorities gave themselves six months to sell the funds’ assets and repay investors. Experts were pessimistic about the likely recovery, and many investors won’t receive the inflated gains shown in their holdings.
The Human and Financial Toll
The figures on investors’ screens were never realistic. Tera investment fund generated a return of more than 1,500 percent over the past year, which one report called “totally illogical by any market calculation or method.” The funds concentrated their holdings in illiquid stocks with low free floats. With relatively few shares available for trading, prices were easier to inflate.
How to repay investors remained undecided. Erdogan was due to chair a committee meeting on Tuesday to discuss next steps. Many affected investors were believed to be ruling-party voters, raising the potential political cost.
Markets reacted at once. A major stock market sell-off followed on 16 September. Turkish stocks fell another 2.38 percent on Monday.
Ties to the Ruling Elite
The crisis revealed links between the funds, their managers and Turkey’s ruling elite. 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 sell-off. So far, she’s the most prominent political casualty.
Politically connected figures sat on the boards of brokerage firms and financial groups accused of involvement, including Tera Group and Pusula. 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, sat on the boards of several companies under Tera Holding.
Authorities arrested Tera Group chairman Emre Tezmen 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 the electronic recording, safekeeping and transfer of securities. Tezmen denied wrongdoing. Muhammed Yariz, chairman of Pusula Portfolio and known for past work within the AKP, was also recently arrested.
Kaya’s disputed trades primarily involved shares in Ozata Denizcilik, a shipbuilder involved in Turkish navy projects. Tera’s brokerage reportedly controlled 95 percent of its shares at one point, and its valuation surged to $5bn, exceeding that of major Turkish companies including Ford Otosan and Eregli. On Monday, authorities arrested an Ozata Denizcilik board member who was the son of a former member of the banking regulator that approved Tera Investment Bank. He was also the son-in-law of a deputy finance minister. 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 or invested themselves. The report said those claims remained unverified.
Asset Freezes and a Sudden Reversal
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. Authorities imposed travel bans on 37 suspects. The measures blocked asset transfers, sales and large cash withdrawals.
The order swept widely. It named investment firms, insurers, food producers and other businesses, among them Tera Yatirim, Pusula Yatirim, Ulusoy Un, Tatilbudur, Enuygun, Astor Enerji, IC Ictas, Emin Evim, Turkiye Hayat ve Emeklilik, Yayla Agro, Turkiye Sigorta and Katilimevim. Fears of severe disruption grew before Borsa Istanbul reopened on Monday, but authorities reversed the order on Sunday. Astor Enerji, with a market capitalisation of $5.3bn, said authorities had lifted its freezing orders and its operations continued uninterrupted.
Erdogan’s Response
Erdogan addressed the controversy on Monday, pledging to pursue those responsible for market manipulation and fraudulent trading schemes. “Whoever lays a hand on the nation’s rights, assets or legal interests will face us and the state,” he said.
Some analysts in Ankara said the government might have to sacrifice more politically connected figures, as it had Kaya, to contain public anger. They argued the scandal was unlikely to have a major effect on the 2028 presidential election. Other observers disagreed. “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.
Why This Matters: Half a million people are waiting on a recovery process whose rules haven’t been set, and most can’t expect the gains they were shown. The scandal also raises questions about accountability. Advisers, a regulator’s relative and a deputy finance minister’s son-in-law all appear in the story, while the MKK chairman-turned-suspect sat inside the market’s own infrastructure. From a rights and rule-of-law perspective, how prosecutors handle politically connected suspects—and whether investors are repaid transparently—will shape public trust in Turkey’s institutions. Ankara has promised action. Investors, many of them ruling-party voters, will judge it by the results.