Uncertainty is rising across decentralized finance after a leading protocol revealed significant losses linked to an external fund manager.
Key Takeaways:
- Stream Finance has suspended all withdrawals and deposits following a reported $93 million loss.
- The loss was disclosed by an external fund manager overseeing part of Stream’s portfolio.
- Law firm Perkins Coie has been appointed to investigate the incident.
- Stream’s stablecoin, Staked Stream USD (xUSD), has sharply depegged to around $0.50.
Stream Finance Suspends All User Activity
Decentralized finance protocol Stream Finance has temporarily frozen all user withdrawals and deposits after one of its external fund managers reported a significant loss totaling approximately $93 million. The company announced the suspension late Monday on X (formerly Twitter), saying the decision was made to protect user funds and allow time to assess the situation.
In its statement, Stream said it is in the process of withdrawing all remaining liquid assets held under external management and expects to complete the retrieval soon. “Until we are able to fully assess the scope and causes of the loss, all withdrawals and deposits will be temporarily suspended,” the company wrote, noting that pending deposits will not be processed during this period.
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 protocol assured users that updates will be shared periodically as the investigation unfolds and encouraged patience while the internal and external reviews are conducted.
Legal Team to Lead Investigation
To determine how the loss occurred and who may be responsible, Stream Finance has engaged the services of law firm Perkins Coie LLP. The investigation will be led by partners Keith Miller and Joseph Cutler, both of whom have extensive experience advising fintech and blockchain firms on regulatory compliance, cybersecurity, and digital asset management.
The move is seen as a step toward restoring user confidence after what appears to be one of the largest reported losses involving a DeFi protocol’s external fund manager this year. Stream stated that the legal team will oversee a “comprehensive review” to identify the underlying causes of the incident and outline steps toward remediation.
Stablecoin xUSD Loses Its Peg
Shortly before Stream’s announcement, blockchain security firm PeckShield flagged that Stream’s associated stablecoin, Staked Stream USD (xUSD), had lost its peg to the U.S. dollar. According to data from CoinGecko, xUSD plunged to as low as $0.53 early Tuesday morning, far below its intended $1 value.
The depegging suggests that investor confidence in Stream’s ecosystem has been severely shaken. Analysts noted that liquidity concerns and uncertainty around the recovery of funds have likely contributed to the sharp decline.
Market Impact and Next Steps
The event has sparked a broader discussion in the DeFi community about the risks of entrusting decentralized protocols with off-chain asset management. External fund managers are often used to enhance yield strategies, but incidents like this highlight the vulnerability such arrangements can introduce.
Stream Finance has not yet specified when normal operations will resume. Users are advised to monitor official announcements and avoid attempting new transactions until the platform confirms stability.
While the full impact remains unclear, the coming days will be crucial for Stream Finance as it seeks to recover assets, stabilize its ecosystem, and regain user trust.
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Alex is an experienced financial journalist and cryptocurrency enthusiast. With over 8 years of experience covering the crypto, blockchain, and fintech industries, he is well-versed in the complex and ever-evolving world of digital assets. His insightful and thought-provoking articles provide readers with a clear picture of the latest developments and trends in the market. His approach allows him to break down complex ideas into accessible and in-depth content. Follow his publications to stay up to date with the most important trends and topics.
Source: https://coindoo.com/defi-protocol-stream-finance-halts-withdrawals-reports-93m-loss-xusd-depegs/