Disclaimer: The following are not to be construed as investment advice. Our goal is to write an objective view on the Chocolate Finance saga that is happening now, as of 11 March 2025.
If you are ever wondering what panic looks like in the financial space, the situation with Chocolate Finance now is an example.
Although not to the extent of the likes of the Silicon Valley Banks or FTX collapse (at least right now), Chocolate Finance seems to have gotten a lot of negative press from major news sites (The Business Times, Channel News Asia etc.) in the past few hours.
Should you be worried that your hard-earned money is doomed? Or is there a silver lining? Read on to find out…
Jump ahead to
What Is Happening with Chocolate Finance Now?
It started with a very attractive promotion when Chocolate Finance collaborated with HeyMax – earning miles on transactions you won’t normally get rewards for, e.g. insurance payments and taxes.
Then out of nowhere, Chocolate Finance announced that it would stop accepting AXS transactions.
What made it worse was that ChocFin phrased it in such a way that made it seem like AXS was the one who blocked the payments, when in reality it was Chocolate Finance themselves.
Bloggers and Youtubers started writing and making videos on them withdrawing their positions in Chocolate Finance. Influential figures in the local space such as Kelvin Learns Investing and Sethisfy are examples.
After watching their videos and reading their posts, I agree with their rationale for withdrawing. A few legitimate reasons include the ability to get higher interests elsewhere, the purpose of AXS payments has now been blocked, and the unguaranteed returns of Chocolate Finance.
But you know the way headlines work in media – we use certain words to garner attention to our content.
Seth’s video title “I’m withdrawing everything from Chocolate Finance — here’s why”, when taken out of context (not reading or watching the video) may cause uneasiness among users.
And we know – bad news travels fast.
All of a sudden, you have users withdrawing and thinning Chocolate Finance’s liquidity pool, so much so that they had to halt instant withdrawals.
This further fuelled the fears with more people wanting out, which led to more and more coverage from the big guys.
It seems like a bank run, but is it?
Instant Withdrawals?!
This is a unique selling point of Chocolate Finance (or should I say was). It is made possible through their Chocolate Liquidity Program.
A friend of a Rarefyi-an put it aptly:
“When you withdraw, they sell the investment for you. Just like selling in the stock market, it takes ~3 working days for them to get the money back. But they are using their operating capital to fulfil instant withdrawals while they wait for the money to arrive in their account, hence it is fast.”
“There were large-scale withdrawals over the weekend so there were heavy withdrawals, and they were large enough that their operating capital is depleted. But as long as sufficient time is given, the sale of the funds will release $$$ back to them for them to process the withdrawals.”
That is also why withdrawals will now take 3-10 working days to arrive in your account.
They do not have spare cash lying around now and have to manually sell your stake to return your money.
If you are facing this error in the picture when withdrawing – unable to find the withdraw button, your account needs to be reverified through a top-up of any amount.
But it still stands that instant withdrawals are stopped until this panic is over.
Your Money is Probably Safe
Chocolate Finance, or Chocfin Pte Ltd (UEN 202347190R), is licensed and regulated by the Monetary Authority of Singapore (CMS101452).
Unlike the bank-run counterparts such as Hodlnaut who only had in-principal approval in the past, ChocFin has a license to manage funds by MAS. Hence, you know that they have to follow some strict regulations.
According to Chocolate Finance, your money is held separately with custodians such as State Street and HSBC. This means that in the event something bad happens to Chocolate Finance, if they were to declare bankruptcy for example, your segregated funds will still be safe.
What if Chocolate Finance sells money market funds at a way lower price than when they bought it?
For context, Chocolate Finance invests your money in short-duration fixed-income funds and money market funds. So, if you were to withdraw and they sell at a cheaper price, your money may be at risk.
These are the investments made by ChocFin. You may search them up on Google with the fund name for more information.
This is a legitimate risk but note that these money market funds are typically not volatile – they do not move wildly as compared to equities. Furthermore, with interest rates on the decline, this usually bodes well for the underlying bonds.
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Your Money May Be in Danger
These are some of the caveats and possible risks to your capital.
Fraud. In the event that Chocolate Finance is actually deceiving everyone (the users, MAS etc.), you obviously won’t be able to get your money back or at least the full amount.
Whether this is the case or not is up to you to assess.
In terms of reputation, Chocolate Finance may never recover from this. They have eroded trust which is important in the Fintech space. So, how they handle the situation now is pivotal. Are they able to bounce back?
Let’s say that there is no fraud. Although your money is safe as it is held in separate custodian accounts in real liquid assets, it may take a long time for you to recover your money if ChocFin liquidates.
Side note, I tried reaching out to Chocolate Finance’s customer service agents, but probably due to the high volumes, they aren’t responding to my queries.
It also seems like the Chocolate Finance Debit Card is not working right now.
Conclusion
Fear is a very powerful thing. It has caused many bank runs and even sparked global financial crises.
I understand that people are panicking as their livelihoods and hard-earned savings are on the line.
However, I urge you to do your own research and not rely on headlines or hearsay.
If you are an investor who is extremely risk-averse, you may want to consider parking your cash in government bonds.
Why we decided to write this article is to hopefully shed light on this Chocolate Finance situation and give both sides of the story.
As we’re writing this article, Seth posted a new article about his view on the current situation. The baseline is that he says he is holding his remaining money until the instant withdrawals are back.
Are you withdrawing? Share your thoughts in the comments below!
Bonus: Chocolate Finance CEO’s Walter de Oude Statement
You can read the former Singlife CEO’s statement here. I have also pasted his exact words from LinkedIn below for those who are unable to access it:
“A small decision can have a big consequence
Chocolate recently launched the HeyMax Miles partnership for our debit card. While it was innovative and well-intentioned, we’ve had some tough learnings to share.
What worked:
Our HeyMax Miles partnership was designed to be groundbreaking, offering 2 miles per dollar on all spending (even typically excluded categories) —rewarding customers while deepening engagement.
It worked brilliantly for customer acquisition. However, bill payments, especially through AXS, surged far beyond expectations, making the programme unsustainable.
What happened:
To keep the programme going, we worked with AXS to disable Chocolate Card acceptance instead of blocking all bill payments entirely. This ensured the programme’s goal of balanced rewards while keeping 2 miles per dollar on all other spend.
But it happened so fast we communicated this change poorly:
– Our initial FAQ mistakenly implied AXS initiated the change, which we quickly corrected.
– Customers using AXS were frustrated by the sudden removal
– This led to negative reviews, increased withdrawals, and overall negative sentiment.
How Chocolate handles withdrawals:
Chocolate delivers its target returns by investing in short-term funds. Unlike banks, customer money is held in segregated accounts, ensuring it’s always safe and earmarked at a customer level.
We also offer instant liquidity withdrawals, where Chocolate fronts the cash before receiving settlements (T+2 days). A withdrawal spike can deplete our liquidity buffers, requiring a temporary pause.
If instant withdrawals are paused they switch to the standard 3–6 day settlement timeframe and remain fully functional. This does not affect Chocolate’s financial stability at all.
If customers withdraw, we sell the equivalent investments and return the proceeds – sometimes instantly, sometimes after settlement. At no point is customer money at risk. In fact our liquidity programme is designed purely to enhance the timing of customer cashflows.
What I’ve learned:
Transparency is really key in building trust, and making sure that communications are well timed, relevant and detailed. I’ve also learned that offering a freebie that you know to be unsustainable is not a great way to build long term trust and relationships.
Running Chocolate Finance has been an incredible journey so far and we’re just getting started. I’ve learned that growth comes with challenges and hard lessons. This experience has been a humbling reminder that disrupting an industry means constantly learning, improving, and
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