If you’ve been following the news, Chocolate Finance, a financial services firm offering 3.3% guaranteed returns on your first $20K, has temporarily suspended instant withdrawals due to “high demand” on March 10.
This happened right after personal finance influencer Seth Wee, better known as Sethisfy, uploaded a YouTube video on Sunday explaining why he withdrew all his money from Chocolate Finance. One of the main reasons? The company removed support for AXS payments from its miles reward program without informing customers in advance.
Aaron Wong, founder of The MileLion, also highlighted this removal on March 5, and both posts started gaining traction on Reddit and HardwareZone forums. This triggered a mass withdrawal frenzy, draining Chocolate Finance’s liquidity.
Before diving into why Chocolate Finance is struggling to pay customers who withdraw their cash, let’s first understand what Chocolate Finance actually is.
What is Chocolate Finance?
Chocolate Finance is a Singapore-based financial services firm founded by Walter de Oude in July last year. In just seven months, the firm gained 60,000 customers and hit almost S$1 billion in assets under management (AUM) by February.
But here’s the key thing: Chocolate Finance is NOT a bank. They don’t hold a banking license. Instead, they operate under a Capital Markets Services Licence (CMSL) for fund management.
In simple terms, they are a discretionary fund manager (DPM), meaning they invest your money on your behalf.
Since Chocolate Finance isn’t a bank, it doesn’t actually hold your money. Instead, customer funds are held separately by independent custodians—HSBC and State Street—so technically, your money should be safe.
How Does Chocolate Finance Offer Instant Withdrawals?
To offer guaranteed returns, Chocolate Finance takes customer deposits and invests in short-term fixed-income funds, much like what other financial institutions do.
But here’s where they’re different—Chocolate Finance offers immediate withdrawals.
Founder Walter de Oude explained in a LinkedIn post on March 10 that to do this, Chocolate Finance has to front the cash from their reserves first, before the actual investment funds are sold and settled.
“Chocolate fronts the cash before receiving settlements (T+2 days). A withdrawal spike can deplete our liquidity buffers, requiring a temporary pause.”
In another words, They pay you first, then they get paid later by selling the investments. But if too many people withdraw at once, they run out of cash before their investments can be liquidated.
How Does the Chocolate Finance Visa Card Work?
The CF Visa card operates the same way.
Every time you make a purchase, Chocolate Finance pre-funds the transaction first and then sells the funds on the backend. It feels like a debit card because your funds get deducted immediately, but in reality, it still depends on Chocolate Finance’s liquidity program.
Which means if the liquidity program collapses, your Visa card stops working too.
The Prelude: The HeyMax Miles Program
On February 11, Chocolate Finance launched a new rewards program with HeyMax Miles, offering 2 miles per dollar (2mpd) on all spending—including AXS bill payments, which banks normally exclude.
Why Do Banks Exclude AXS Transactions?
- Because someone has to pay for those miles. And bill payments like AXS are easily abused.
- The fees Chocolate Finance earned (MDR—Merchant Discount Rate, usually 1-3%) were way too low to cover the 2mpd rewards they were offering.
Why Did Chocolate Finance Allow AXS Transactions?
They knew it wasn’t sustainable, but they did it anyway.
“Yet, we were sponsoring the miles,” said de Oude.
They hoped that profits from other transactions would offset the cost of AXS bill payments.
Spoiler Alert: It Didn’t Work.
“It worked brilliantly for customer acquisition. However, bill payments, especially through AXS, surged far beyond expectations, making the programme unsustainable.”
The Trigger: The Quiet Removal of AXS Payments
On March 5, just three weeks into the promo—right before tax season—Chocolate Finance quietly removed AXS payments without informing customers.
They stealth-edited the FAQ, making it seem like AXS stopped accepting CF cards, instead of admitting they pulled it themselves.
Both Seth Wee and Aaron Wong called them out. Then AXS clarified that Chocolate Finance had requested the removal—not the other way around.
Customers were furious, leading to a mass withdrawal frenzy. And since Chocolate Finance already had a thin liquidity buffer, they ran out of cash fast.
The Fallout: Suspension of Instant Withdrawals
Because of how Chocolate Finance structured its liquidity program, this sudden panic and rush to withdraw drained their liquidity buffer over the weekend.
The problem? On weekends, they couldn’t:
- Find buyers for their investments
- Get a credit line from banks
So they had no choice but to suspend instant withdrawals—at least temporarily.
Is Your Money Safe?
Chocolate Finance says yes.
In a statement on Monday, they reassured customers that fund managers don’t typically offer instant withdrawals anyway and that all funds are still securely held under HSBC and State Street.
“This pause is not a liquidity issue but a matter of managing increased transaction volume.”
They also added:
“We want to reassure our customers that Chocolate Finance remains a strong and stable place for your spare cash, and we are here for the long run.”
Chocolate Finance invests in highly liquid, short-term investment-grade bonds, ensuring that customer money remains under independent custody.
When Will Instant Withdrawals Be Back?
Chocolate Finance hasn’t provided a clear timeline.
“We will reinstate the instant liquidity programme when the market settles down,” said de Oude.
No fixed timeline. No guarantees.
“As customers start to receive their withdrawal proceeds in the coming days, they will see that it is working as it’s supposed to, and once that’s back, we can then reinstate the (instant) liquidity programme.”
What Should You Do Next?
If you’re a Chocolate Finance customer, you have three options:
- Withdraw your money now and wait 3 to 10 business days for processing.
- Leave your funds in Chocolate Finance and wait for them to restore instant withdrawals.
- Continue using Chocolate Finance as an investment platform—they still offer a 3.3% guaranteed return on your first $20K.
The Lesson Learnt
At the end of the day, this whole situation could have been avoided if Chocolate Finance had properly communicated the removal of AXS payments.
It goes to show how much transparency and integrity matter when people trust a company with their money. Did greed or ego drive Chocolate Finance to chase rapid market acquisition?
If you found this article interesting, do like and share it with someone who might benefit from it!
And as always, if you have any queries about starting your financial journey in a holistic way, drop me a message, and let’s connect!
Source:
https://mothership.sg/2025/03/chocolate-finance-suspends-withdrawals
