Turkey Weighs Pooling $18 Billion in Frozen Fund Assets as Formal Liquidation of 131 Funds Gets Underway

Since Turkish regulators froze redemptions at Pusula Portfoy and Tera Portfoy in mid-August, the fallout has spread across Turkey's entire fund management industry. Turkey's Capital Markets Board, known as the SPK, formally began liquidating 131 investment funds on September 18, and the agency is now exploring whether pooling the frozen assets across all of them could speed up repayment to the roughly 350,000 investors caught in the mess, according to Crypto Briefing.

The numbers are not small. The funds hold roughly $18.3 billion, or about 890 billion Turkish lira, according to Bloomberg reporting cited by ON Invest. Seven portfolio management firms are involved: Tera Portfoy, Pusula Portfoy, A1 Capital, Atlas, Bulls, Hedef and Pardus, according to Ground News.

How it got here

The trouble traces back to August, when regulators tightened rules on mutual funds holding large, concentrated stakes in companies with a thin free float, meaning only a small slice of shares actually trades on the open market, according to ON Invest. That mattered because some of those stocks had exploded in value. Destek Finans Faktoring, a short-term business lender, became Borsa Istanbul's second-largest company by market value before its recent slide, and its shares remain more than 300% higher on the year even after falling 37% from a July peak, according to Reuters reporting cited by Turkish Minute.

When Tera Portfoy and Pusula Portfoy disclosed they couldn't meet redemption requests, the dam broke. Tera alone faced roughly 300 billion lira, about $6.15 billion, in withdrawal demands, according to Crypto Briefing. The Istanbul exchange's BIST 100 index fell 5.54% on September 16 as panic spread, then clawed back 2.95% the next day to close at 13,509.76 after the central bank boosted repo funding and regulators ordered the liquidation, according to ProtoThema. The bounce didn't hold. On September 18 the BIST 100 fell another 1.2% and the broader All Share index dropped 2.1%, with about 530 stocks falling against just 47 gainers, according to ON Invest.

The crackdown

Turkish authorities moved fast on the criminal side. Muhammed Yariz, chairman of Pusula Portfoy, was arrested, according to a statement from the Istanbul Chief Public Prosecutor's Office cited by ProtoThema. Ibrahim Bekci, a deputy chief executive and portfolio manager at Tera Portfoy, was detained over alleged manipulation of Destek Finans Faktoring shares and barred from trading on Borsa Istanbul for two years, with all his capital markets licenses cancelled, according to Turkish Minute. Namik Kemal Gokalp of Hedef Holding was also detained. Businessman Altunc Kumova, chairman of Destek Holding and one of Turkey's wealthiest people, was detained after shares in some of his companies rose by several thousand percent over the past year, according to ProtoThema.

Travel bans were slapped on Tera Holding chairman Emre Tezmen, Pusula Holding's Serdar Turhan, Bulls Yatirim chairman Kemal Akkaya and Lydia Holding chairman Enver Cevik. The SPK referred 38 people to prosecutors over trading in Destek Finans Faktoring, Katilimevim and dairy producer Gundogdu Gida, according to Turkish Minute. Istanbul Chief Public Prosecutor Akin Gurlek said the broader crackdown included four fund executives and 16 social media manipulators arrested, 51 people under travel bans, and 246 social media accounts blocked for allegedly spreading panic, according to Ground News.

The Financial Times, in coverage flagged by Ground News as leaning right, described the affair as a "Ponzi scheme" harming 300,000 retail investors. No fraud or Ponzi-scheme charges have actually been filed. Turkish prosecutors have so far pursued referrals over alleged market manipulation and misleading price signals, not a Ponzi structure specifically. That's a meaningful distinction: a Ponzi scheme means new investor money paying off old investors, while market manipulation means inflating prices through coordinated trading. Turkish officials have not confirmed which, if either, ultimately applies, and the investigations are ongoing.

Not systemic, says the government

Finance Minister Mehmet Simsek told NTV on September 18 that the crisis is contained. "We have isolated the problem area. There is no systemic risk," he said, according to Bloomberg reporting cited by ON Invest. Simsek put the affected funds at 10% to 11% of total fund assets nationally, according to Ground News.

The math behind repayment is the open question. Banks handling the wind-down, state-owned Ziraat Bankasi for six of the firms and Turkiye Is Bankasi for Tera's funds, face a three-month deadline to convert holdings into cash. But roughly 60% of the portfolios are locked in illiquid, inflated equities, according to Ground News, which is exactly why the SPK is now weighing whether pooling assets across all 131 funds might get investors paid faster than liquidating each fund on its own separate timeline.

Gold, not Bitcoin

The broader currency backdrop adds weight to the crisis. The lira has fallen to roughly 48.8 per dollar, down from 41.3 a year ago, an 18% depreciation, with inflation still above 30% and the central bank's key rate at 37%, according to reporting from Weex citing IMF observations. Turks facing that kind of instability have a long-standing habit of parking savings in physical gold rather than banks, a practice known as yastik alti, or "under the pillow." Turkish households and businesses held roughly $600 billion in gold outside the banking system as of central bank data reported by Reuters in February 2026, according to NPR.

Economist Selva Demiralp of Koc University, a former Turkish central bank economist, told NPR that the habit isn't irrational. "Once you look at why people do this, it stops looking irrational actually," she said, calling it "a very rational response to a long history of high and unpredictable inflation." Notably, during this fund crisis it was gold and stablecoins, not Bitcoin, that saw the heaviest safe-haven demand, according to Weex. Turkish officials argue the gold-hoarding culture itself drains capital that could otherwise flow into the formal economy, a tension NPR's reporting frames as unresolved between household self-protection and national financial development.

The SPK has given itself three months to finish the liquidation, with authority to extend that window if needed. Whether pooling wins out as the repayment method, and how much of the $18.3 billion actually reaches the 350,000 investors waiting, remains unanswered.