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Decentralized finance (DeFi) platform Stream Finance, known for issuing stablecoins and managing on-chain assets, has suspended all deposits and withdrawals after uncovering a $93 million loss linked to an external asset manager.
Yesterday, an external fund manager overseeing Stream funds disclosed the loss of approximately $93 million in Stream fund assets.
In response, Stream is in the process of engaging Keith Miller and Joseph Cutler of the law firm Perkins Coie LLP, to lead a comprehensive…
— Stream Finance (@StreamDefi) November 4, 2025
The loss was reported on November 3, prompting Stream Finance to engage international law firm Perkins Coie to conduct an independent investigation, led by attorneys specializing in digital asset regulation and compliance.
Stablecoin XUSD Loses 70% of Its Peg
Stream Finance said it is in the process of recovering liquidity from various counterparties and will continue providing regular updates.
However, the incident comes just one day after the company’s stablecoin, Staked Stream USD (XUSD), depegged from the U.S. dollar, plunging to $0.51 and losing nearly 70% of its value.
Analysts believe the sharp decline in XUSD’s price is directly related to the asset management losses. The company has not disclosed the name of the external asset manager involved or details of the lost assets.
As of publication, all deposits and withdrawals remain frozen, and there is no timeline for resumption.
Ripple Effects Across the DeFi Ecosystem
The fallout from Stream Finance’s loss is raising alarms across the Ethereum-based DeFi ecosystem, where multiple interconnected protocols rely on shared liquidity pools and collateral frameworks.
Among the most exposed is Elixir’s deUSD protocol, which reportedly loaned $68 million in USDC to Stream Finance, representing 65% of its total reserves. Stream Finance has informed Elixir that repayments are suspended pending legal review.
Other affected projects include Treeb’s scUSD stablecoin, as well as protocols such as Mythras, Silo, and Euler, which are all linked through lending loops and collateralized borrowing structures.
Additionally, investment firms Valamore and MEV Capital are reported to hold exposure to Stream Finance’s assets.
Analysts warn that the total indirect exposure could reach several hundred million dollars, depending on how the collateral unwind plays out.
“The full scope of risk contagion remains unclear,” one industry analyst told Decrypt, warning that cross-protocol exposure could amplify systemic stress across multiple DeFi lending markets.
DeFi Industry Faces Renewed Stability Questions
The Stream Finance incident is the latest in a string of DeFi-related losses tied to opaque asset management practices. It comes amid renewed calls for on-chain transparency, real-time auditing, and proof-of-reserves mechanisms across stablecoin and yield-bearing platforms.
While Stream Finance has pledged to “cooperate fully with regulators and auditors,” investor confidence in algorithmic and hybrid stablecoins remains fragile following similar collapses earlier this year.
If unresolved, analysts warn the event could undermine confidence in DeFi-native stablecoins, especially those tied to external asset managers rather than fully collateralized reserves held on-chain.
