Stream Finance Halts Withdrawals After $93M Asset Loss, Stablecoin XUSD Plunges

Decentralized finance (DeFi) platform Stream Finance has suspended all deposits and withdrawals after discovering a $93 million shortfall in its managed assets. The company revealed in an X post on Monday that the loss was reported by an external fund manager overseeing part of its portfolio.

According to Stream Finance, the fund manager disclosed the issue on Sunday, prompting the platform to immediately engage lawyers from Perkins Coie to conduct a full investigation. 

“We are actively withdrawing all liquid assets and expect this process to be completed in the near term,” the team stated. “We will provide periodic updates as additional information becomes available.”

Stream Finance Freezes Activity

During the investigation, Stream Finance confirmed that all withdrawals are paused and pending deposits will not be processed until further notice. The sudden suspension has left many investors uncertain about the fate of their funds and the platform’s next steps.

Stream Finance operates as a yield-focused DeFi protocol that uses a “recursive looping” mechanism to generate returns. It also issues a collateralized stablecoin, Staked Stream USD (XUSD), which is designed to maintain a one-dollar peg. However, that peg has now collapsed amid growing fears over the platform’s financial health.

XUSD Stablecoin Depegs as Community Raises Concerns

Before Stream Finance’s official statement on Monday, users had already noticed irregularities and began voicing concerns on social media over the weekend. Deposits and withdrawals appeared to have been quietly paused, and XUSD started to depeg, falling below $1 as uncertainty spread.

Labs founder Omer Goldberg warned on X roughly 10 hours before Stream’s announcement that XUSD had “begun to depeg materially” following an over $100 million exploit on Balancer, a decentralized automated market maker.

The situation comes just days after Stream Finance addressed community questions about discrepancies between its total value locked (TVL) figures on its website and those listed by DefiLlama, a popular DeFi analytics platform. 

Stream had claimed around $160 million in user deposits and $520 million in total deployed assets, though DefiLlama disputed the inclusion of recursive looping in its TVL metrics.