Turkey has been shaken by the collapse of Tera Group, one of the financial groups that in recent years had attracted thousands of investors with dizzying profits and the claim that it would become the “Goldman Sachs of Turkey.”
The model used by the company is being compared to a Ponzi scheme and is reminiscent of the financial pyramids that collapsed in Albania in 1997.
Some 680 billion Turkish liras, or roughly $14 billion, in assets managed by the group’s investment arm are involved in liquidation proceedings. Turkish authorities have launched an investigation and arrested a senior executive at the company, while two of the country’s largest banks have been tasked with overseeing the process.
The crisis has also hit the Istanbul Stock Exchange hard, causing sharp declines and a lack of liquidity. Regulators have been forced to temporarily halt trading to limit the spread of panic.
From 2,000% growth to collapse
Tera Group had built an image of a company on the rise. Within a year, its shares rose by about 2,000%, attracting the attention of small and large investors.
Founder Emre Tezmen publicly stated that he aimed to create a financial group similar to Goldman Sachs.
After the crisis erupted, Tezmen claimed that Tera had become the subject of a “speculative attack by a malicious force.”
Critics say the real problem was the concentration of investments in a small number of illiquid stocks, most of which were linked to the group itself, as well as the use of borrowing to finance the investments.
The fund that reported gains of over 17,000%
At the center of the scandal is one of Portföy’s main funds, which had become famous on social media for its extraordinary returns.
The fund reported a total return of more than 17,000% since the beginning of 2025.
But behind these figures lay an extreme concentration of risk. At one point in 2023, about 99% of the fund’s assets were invested solely in Tera Yatirim shares.
This means that investors’ money was used almost entirely to buy shares of the company associated with the fund itself.
The rise in share prices created huge paper profits, which attracted new investors. But once the massive selling of shares began, the entire mechanism faced a lack of liquidity.
About 350 thousand investors involved
Authorities have tasked two large banks with overseeing the liquidation of more than 100 funds of Tera Portföy and other companies.
These funds manage over $18 billion and include about 350,000 investors, who are now waiting to learn how much of their money can be recovered.
Turkish Finance Minister Mehmet Şimşek stated that the problematic area has been “quarantined” and that there is no systemic risk to the entire financial sector.
However, the market reaction has been strong. Tera Yatirim shares lost about 27% of their value within three sessions, while the Istanbul Stock Exchange headed for its worst week in more than a year.
Accusations of institutional failure
The case has raised major questions about the functioning of supervisory institutions in Turkey and how a fund was allowed to concentrate almost all of its investments in a related company.
The former deputy head of Turkey’s anti-financial crime agency MASAK, Ramazan Başak, called the issue a “failure of supervision” that left investors exposed to extreme risks.
Alarm was also raised by international investors, with MSCI warning that problems in market functioning could damage Turkey’s position in emerging market indices.
In August, authorities tightened rules for funds that had too many investments in illiquid stocks. The obligation to sell some of these positions triggered a wave of liquidations.
Tera was originally a relatively unknown brokerage company, but quickly expanded into technology, cybersecurity, banking services, factoring, and real estate.
The group had also increased its visibility through its sponsorship of the Beşiktaş football club. After the crisis erupted, the company’s logo was removed from the team’s jerseys, further deepening the loss of trust.
The Tera issue has now become one of the biggest crises of confidence in the Turkish financial market, as authorities try to prevent it from spreading to the rest of the economy. /skyweb.al