Stream Finance Suspends Deposits Following xUSD Depeg and Widespread DeFi Sell-Off

Highlights:

• Stream Finance faces $93 million loss and halts all user transactions to secure assets and start an investigation.
• Stream Finance has suspended deposits as law firm Perkins Coie begins a review into fund loss and risk exposure.
• The xUSD stablecoin has dropped to $0.43 as traders exit DeFi markets following Stream Finance’s asset disclosure.

Stream Finance has halted all withdrawals and deposits after revealing a $93 million loss linked to an external fund manager. The disclosure came late Monday in a post on X, where the DeFi protocol confirmed that the manager reported the loss of assets held in Stream’s funds. The firm said it is now working to withdraw all liquid assets and expects the process to conclude soon.

Advertisement

Stream Finance froze deposits and withdrawals after a $93M loss, sending its stablecoin to $0.50.

Shortly after the insolvency announcement, its supposedly stable xUSD coin depegged by 25%+ a clear signal that collateral inside the vault had evaporated. When the vault loses… pic.twitter.com/Z8wUzB8pva

— MASTR (@MastrXYZ) November 4, 2025

The platform explained that pending deposits will not be processed during this period. Stream said all transactions will remain paused until it fully identifies the cause and extent of the loss. The company also pledged to provide frequent updates to users as the review progresses.

Earlier, blockchain security firm PeckShield warned that Stream’s staked stablecoin, xUSD, had depegged sharply. Data from CoinGecko showed that the token was trading at nearly $0.53 as of early Tuesday. The abrupt break of the peg caused concern in the market, particularly because xUSD is being utilized heavily in the decentralized lending ecosystem.

#PeckShieldAlert Staked Stream USD $XUSD has depegged, down ~58%. @StreamDefi https://t.co/otLGs1Ti9t pic.twitter.com/lziLZj2QSO

— PeckShieldAlert (@PeckShieldAlert) November 4, 2025

Stream Finance, whose yield optimization model had been popular, increasingly fell under the scrutiny of traders and liquidity providers. The market responded to the news by selling the token under heavy pressure, which further accelerated the losses throughout the token ecosystem.

Stream Finance Suspends Deposits as Perkins Coie Launches Internal Investigation

Stream Finance hired law firm Perkins Coie LLP to conduct a formal investigation to address the incident. The company appointed lawyers Joseph Cutler and Keith Miller to supervise the process. The attorneys have long experience working in fintech, digital assets, and internal audits of financial misconduct.

Stream said it chose Perkins Coie to ensure a transparent and independent inquiry. The firm emphasized its commitment to corporate accountability and clear communication with users. In its latest statement, Stream said it would maintain close contact with stakeholders and publish findings once they are verified.

According to Stream, the team continues to retrieve available funds and secure custody of any remaining assets. The company said it expects to finalize this withdrawal phase shortly. During this period, all user deposits and withdrawals will stay disabled. Stream noted that this measure is necessary to prevent further complications until the investigation ends.

DeFi Markets React as Stablecoin Depegs and Loan Exposure Surfaces

This revelation led the xUSD stablecoin of Stream to drop nearly $0.43 during the night following furious sell orders on Arbitrum-based exchanges. Analysts referred to the incident as a trust shock that caused defensive trading within related tokens.

On-chain observers said trading activity intensified between 6:00 p.m. UTC and 2:00 a.m. UTC, with liquidity drying up on major pools. Lending platforms such as Euler, Morpho, and Silo faced collateral concerns because xUSD, xBTC, and xETH were used in multiple active positions. Three weeks earlier, Binance had rolled out a $283 million compensation plan for users affected by depegging incidents involving its Earn products tied to USDE, BNSOL, and WBETH.

A pseudonymous analyst known as YAM estimated that total outstanding loans backed by Stream-related assets exceed $280 million. The analyst further stated that this number might not include indirect exposures to other synthetic assets and lending loops. Traders are also watching to see whether the risks associated with liquidation may extend to other related DeFi platforms.

This is a massive loss. It's unclear how this will be settled in between xUSD/xBTC/xETH holders and lenders against these tokens, so let’s go over all stablecoins/vaults that have (in)direct exposure to Stream.

Best we can tell, these stablecoins have indirect exposure:
Elixir’s… https://t.co/QEPsWf1fM2

— YAM 🌱 (@yieldsandmore) November 4, 2025

Stream was launched in early last year with a model that integrates decentralized finance with conventional market strategies. However, its dependence on outside fund managers has become an important point of discussion in the current review. The reaction and openness of the firm will probably influence perception about analogous DeFi projects in the future. Meanwhile, DeFi platform Balancer recently confirmed a major exploit that drained more than $129 million from its v2 pools.

Advertisement