[SINGAPORE] The Monetary Authority of Singapore (MAS) said on Wednesday (Mar 12) that it continues to engage Singapore-based financial services firm Chocolate Finance “to ensure that all customer withdrawals will be met in an orderly fashion”.
This follows a joint statement by Chocolate Finance and global fund distribution platform Allfunds that reaffirmed the security of Chocolate Finance customers’ fund holdings, as well as “the continued orderly processing of withdrawals”.
Both parties confirmed that withdrawals are being processed “as expected”, in line with standard industry practices.
“Customers who have submitted withdrawal requests can expect to receive their monies within three to six business days from when they requested withdrawal, in accordance with normal investment fund redemption cycles,” they said.
MAS said: “Digital advisers are required to segregate customer assets from their own. In particular, customers’ assets and monies must be held in independent custody by custodians licensed and regulated by MAS.”
It further added that customer monies “must remain intact” and cannot be used to meet the liabilities of the digital adviser at all times.
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As a licensed custodian, Allfunds provides fund dealing and custody services to Chocolate Finance, ensuring that customers’ investments are “securely custodised and safeguarded within Singapore’s regulatory framework”.
Chocolate Finance also said that all customers’ investment funds are securely held in “segregated, ringfenced accounts” with both the company and Allfunds.
MAS noted the confirmation by both parties that the requirements specified above have been “fully met”.
David Perez de Albeniz, chief executive of Allfunds Singapore, said the safety of customers’ investment fund holdings is “assured”.
He added: “Our robust custodian framework ensures that all investments remain protected and accessible to Chocolate in accordance with standard redemption processes.”
Chocolate Finance founder and chief executive Walter de Oude said that despite a spike in withdrawals, all requests are being processed in an orderly manner.
“We assure customers that their funds are secure, and withdrawals are proceeding as scheduled,” he said.
On Monday, Chocolate Finance temporarily suspended instant withdrawals due to “high demand”. A notice on its mobile app that the platform was experiencing an unusually high volume of withdrawal requests quickly went viral among the online community, raising concerns among investors.
Before the suspension, customers could request for instant withdrawals of up to S$20,000 a day.
The firm said on Monday that liquidity issues were not the reason behind the pause in instant withdrawals. Instead, it is a “matter of managing increased transaction volumes”.
In a LinkedIn post on the same day, founder de Oude explained that Chocolate Finance “fronts” the cash before receiving settlements (T+2 days). A spike in withdrawals would deplete its liquidity buffer, which is why a temporary pause is required.
Chocolate Finance’s system of immediate withdrawals was tested when the bill payments that customers made surged “far beyond expectations” in a bid to tap a rewards programme.
This led the platform to withdraw from AXS, sparking unhappiness among Chocolate Finance users, leading to increased withdrawals.
Launched in July last year, Chocolate Finance gained 60,000 customers within its first year and boasts close to S$1 billion in assets under management as at February – just seven months after its roll-out.
The firm is a brand of Chocfin, which is a capital market services licence holder regulated by MAS.
