Kazakhstan may have the world's best potassium, but as of today it also has a very big problem, or rather 22.6 billion problems.

Overnight, Bank of New York Mellon said it had frozen $22.6 billion in assets held by Kazakhstan’s National Oil Fund in a rare move that escalates a legal battle between the government and a Moldovan investor. According to Reuters, Moldova’s Anatolie Stati and his companies had earlier won damages against the Kazakh government, and his pursuit of payment has resulted in some 40% of the oil revenue-supported fund being frozen. Putting the freeze in context, it is roughly equivalent to 17% of Kazakh GDP.

Details of the asset freeze, which took place in October, were reported by Reuters on Thursday and were subsequently disclosed at a court hearing in Britain. At the heart of the case is a years-long legal row between businessman Stati, his son Gabriel, two family-controlled companies and the Kazakh government of President Nursultan Nazarbayev. The Moldovans invested in Kazakhstan’s oil and gas industry and have charged that they were subjected to significant harassment from the state aimed at forcing them to sell their investments cheaply, according to Reuters.

While Kazakhstan had denies the allegations, Anatolie and Gabriel Stati and two of their companies – Ascom Group S.A. and Terra Raf Trans Traiding Ltd., won an international arbitration award of around $500 million against the government.

Then on Tuesday, Kazakhstan’s government and central bank, the National Bank of Kazakhstan, filed court documents asking a London judge to protect their rights over the fund that is held at BNY Mellon’s London branch under a global custody agreement. The Kazakhstan government and central bank also said they’re "suffering significant, and hard-to-quantify, losses by their inability to complete existing transactions or place new ones."

However, by this point BNY Mellon said it had frozen the funds because of orders from Belgian and Dutch courts, where creditors are trying to enforce the $500 million arbitration award.

BNY also said it’s "plainly entitled" to freeze the assets, and said it was "caught in the middle" of a dispute between the Kazak government, the central bank, and the creditors.

Meanwhile, following the arbitration verdict, the former Soviet republic refused to pay, and in October Kazakhstan filed a civil racketeering lawsuit in the U.S. District Court in Washington, D.C., against the Statis and their two firms. The central bank also filed a lawsuit against BNY Mellon challenging the asset freeze. However, the claim was dismissed by a judge in London on Thursday.

As Bloomberg adds, while Kazakhstan had asked a London court this week for “urgent declaratory relief” aimed at protecting the government and central bank’s rights in the $22 billion fund, a clerk to judge Andrew Popplewell said by email Thursday: “the judgment today in the BNY Mellon/Kazakhstan case, resulted in the claim being dismissed without recourse to appeal.”

In short, the Kazakh government - which thought it had full access to some $23 billion parked at BoNY - suddenly finds itself $23 billion short.

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“It’s pretty unprecedented,” said Simon Quijano-Evans, an investment strategist at Legal & General Investment Management in London. “If 40 percent of a sovereign fund is frozen and you don’t have access to it, that should be an alarm bell for policymakers."

Yes but... it's Kazakhstan: who cares how banks mistreat some third world nation. Surely that will never happen to "developed" world oil funds, right. Just like Saudi Arabia would never shake out its richest royals for billions just because the Crown Prince felt like buying himself a French Chateau and a Leonardo picture, all under the guise of "economic reform."

Sarcasm aside, not everyone was immune, and Kazakhstan's dollar bonds promptly fell after the news.

So what are the implications? “Theoretically the fund is a national institution so it should cause a rethink for central banks and sovereign wealth funds as it’s been assumed so far that these assets were relatively immune,” said Quijano-Evans, who clearly is right, especially one day after South Africa's ruling party decided that it will nationalize the country's central bank.

And now we wait for the next multi-billion asset freeze from some sovereign which not many will shed tears for... until one day, as the saying goes, they come to freeze your assets.