Eh, you heard about Chocolate Finance (CF) stopping instant withdrawals? Singaporeans are panicking kan cheong! Is this the start of a bank run? Let’s break down what’s happening and what you should do lah.
Sudden Withdrawal Freeze
- Chocolate Finance, a robo-advisor, stopped instant withdrawals, causing alarm.
well I say run while you can. bank run style is coming
- The platform invests in money market funds (MMFs), which typically require 2-3 days for processing.
All funds are parked in money market funds. All MMF are subject to 2-3 days of processing for deposit and withdrawals. Go try out any other robo-advisor cash management solution and you will see they have this as their standard processing time
- CF maintains a liquidity pool for instant withdrawals, but it’s not unlimited. Increased withdrawals depleted this pool.
Current Situation: Many Singaporeans are worried about accessing their funds.
Panic and Uncertainty Arise
- Users are concerned about the lack of SDIC insurance, unlike traditional banks.
Bank run liao lolllll. Not SDIC insured too lolll
- Some worry about potential losses if CF needs to sell underlying investments.
Just called CF. They said that they’re selling underlying units so your funds would be there. But depending on the investments, you might not get your full sum back (like the disclaimer had said).
- The situation highlights the risks associated with newer fintech platforms.
Challenge Description: Fear of losing money and lack of trust are driving concerns.
Steps to Take Now
- Assess your risk tolerance. Are you comfortable with potential delays and market fluctuations?
Better to be part of bank run than a victim of one. Even if this is nothing in the end, better to take out your money first if can.
- Contact Chocolate Finance for updates and clarification on your withdrawal status.
- Consider diversifying your investments across different platforms and asset classes. Don’t put all your eggs in one basket lah.
- Remember that your funds are held by custodians like HSBC and State Street.
Your funds with Chocolate Finance are held separately by trusted custodians, HSBC and State Street, under the management of our fund managers, and are ringfenced in the event that anything happens to Chocolate.
Solution: Stay informed, diversify, and understand the risks involved.
