Stream Finance Reports £93M Loss, Halts Trading Operations

Stream Finance has launched an investigation into a staggering £93 million loss disclosed by an external fund manager overseeing the protocol’s assets. This significant financial blow has prompted immediate action from the decentralised finance (DeFi) platform, which subsequently suspended all deposits and withdrawals across its services.

Following the announcement of Stream Finance’s losses, the protocol’s staked stablecoin, XUSD, broke dramatically from its $1 peg, plummeting by as much as 58% within 24 hours. Between 6:00 pm UTC on 3 November and 2:00 am UTC on 4 November, liquidations and arbitrage pressure drove XUSD down to approximately $0.43. The Stream Finance legal investigation is now being led by the law firm Perkins Coie LLP, while concerns grow about the wider market implications. According to analysts, the total outstanding loans and borrowings secured by Stream-related collateral likely exceed £280 million, raising significant questions about potential contagion effects across interconnected DeFi ecosystems.

Stream Finance Discloses £93M Loss and Halts Operations

On Monday, Stream Finance revealed catastrophic news when an external fund manager disclosed a staggering loss of approximately AUD 142.20 million (£93 million) in assets under their management. This financial disaster prompted immediate action from the decentralised finance protocol, which operates strategies designed to enhance capital efficiency and yield generation.

Loss Reported by the External Fund Manager

The significant financial blow came without warning when the external fund manager overseeing Stream funds reported the substantial loss on Sunday. Stream Finance immediately began the process of damage assessment and asset recovery. The DeFi platform, which launched in early 2024 with a focus on blending decentralised finance with traditional market techniques, now faces serious questions about its risk management practices and oversight procedures.

Immediate Suspension of Deposits and Withdrawals

Consequently, Stream Finance implemented an immediate halt to all platform operations. “Until we are able to fully assess the scope and causes of the loss, all withdrawals and deposits will be temporarily suspended,” stated the company. Additionally, the team confirmed that pending deposits would not be processed during this period.

Meanwhile, Stream initiated a process to withdraw all remaining liquid assets, with the expectation that this recovery effort would be completed “in the near term.” This protective measure aims to secure any remaining funds while the investigation unfolds.

Stream’s Public Statement on X

The company addressed the situation directly through its X (formerly Twitter) account, where it outlined initial steps being taken:

• Disclosure of the approximate AUD 142.20 million loss in Stream fund assets
• Engagement of Keith Miller and Joseph Cutler from law firm Perkins Coie LLP to lead a comprehensive investigation
• Commitment to providing periodic updates as additional information becomes available

“Our decision to retain Perkins Coie LLP reflects Stream’s unwavering commitment to transparency and robust corporate governance,” noted the company in its public statement. Throughout this period of uncertainty, Stream has emphasised that normal operations will not resume until the full extent and causes of the losses have been thoroughly assessed.

Stream Finance Launches Legal Investigation with Perkins Coie LLP

In a renowned worldwide legal firm, Perkins Coie LLP, has been enlisted by Stream Finance to carry out a comprehensive investigation into the facts underlying the £93 million loss in reaction to the financial catastrophe. The legal team will conduct a comprehensive review to examine both the scope and causes of the financial setback.

Law Firm’s Role and Expertise

Perkins Coie brings significant credentials to the investigation, having established itself as a leader in the financial technology and blockchain sectors. The firm is recognised as pre-eminent in blockchain and cryptocurrency matters, regularly advising clients on product structuring, licensing, acquisitions and crypto litigation. Their client portfolio includes payments platforms, innovative blockchain companies, challenger banks and crypto exchanges.

Furthermore, Perkins Coie holds top-tier rankings in the 2025 Chambers FinTech Legal Guide across three categories: Blockchain & Cryptocurrencies (Band 1), FinTech Legal (Band 2), and Payments & Lending (Band 2). This expertise positions them ideally to navigate the complex regulatory and technical aspects of the Stream Finance case.

Key Attorneys Assigned to the Case

Stream has specifically appointed two senior attorneys from Perkins Coie to lead the investigation: Keith Miller and Joseph Cutler. As the chair of Perkins Coie’s Fintech Industry Group, Joseph Cutler assists clients in adhering to international sanctions regulations, state money transmission licensing rules, and the Bank Secrecy Act. He also contributes special knowledge in anti-money laundering issues.

Notably, Chambers described Cutler as “very smart on anti-money laundering matters”. Both attorneys have extensive experience handling internal investigations and cryptocurrency-related cases, making them well-suited for this complex financial inquiry.

Stream’s Commitment to Transparency

“Our decision to retain Perkins Coie LLP reflects Stream’s unwavering commitment to transparency and robust corporate governance,” Stream stated on their X social media account. The company has pledged to maintain transparency throughout this challenging period.

As part of this commitment, Stream Finance has promised to provide periodic updates as the investigation progresses. The DeFi platform has indicated that normal operations will not resume until the investigation determines the full extent and causes of the losses.

xUSD Depegs as Panic Selling Hits DeFi Markets

The fallout from Stream Finance’s financial troubles quickly spread to cryptocurrency markets as traders rushed to offload their positions. This rapid reaction triggered severe price instability across multiple decentralised finance platforms.

Related Article: Young Australians Face £1.2M Cryptocurrency Regret as Bitcoin Soars

xUSD Drops From $1 to $0.43

Following Stream’s announcement of suspended operations, its stablecoin xUSD dramatically broke from its target peg. Rather than maintaining its designed $1 value, xUSD plummeted by approximately 58% within 24 hours. The price collapse occurred primarily between 6:00 pm UTC on November 3 and 2:00 am UTC on November 4, when liquidations and arbitrage pressure drove the token’s price down to approximately $0.43. On-chain analysts described this as a trust shock rather than a confirmed technical failure.

Heavy Selling on Arbitrum-Based Platforms

Arbitrum-based platforms bore the brunt of the selling pressure as investors scrambled to exit positions. Throughout the initial price collapse, no direct evidence of a protocol exploit emerged; however, the information vacuum fuelled panic as depositors withdrew liquidity from any platform they perceived might be directly or indirectly affected. The market deterioration intensified as utilisation rates approached 100% with lending rates potentially reaching 88% on some platforms.

Impact on Camelot and Uniswap Liquidity

The depegging created ripple effects across major decentralised exchanges. Trading volumes spiked sharply as panic selling ensued, particularly on Camelot and Uniswap, where xUSD liquidity pools faced extraordinary pressure. Moreover, concerns over backing intensified when social media posts claimed on-chain data showed roughly $170 million ($259.93m AUD) in supporting assets against approximately $530 million ($810.36m AUD) in outstanding loans. This suggested a leverage ratio exceeding four times, though these figures could not be independently verified immediately.

DeFi Lending Markets Face Exposure to Stream-Related Assets

Beyond the immediate crisis at Stream Finance, concerns are growing about widespread exposure across DeFi lending markets, potentially affecting hundreds of millions in collateralised loans.

xUSD Used as Collateral Across Multiple Protocols

xUSD, Stream’s stablecoin, serves as collateral in various curated lending markets, including Euler, Morpho, and Silo. These platforms operate across multiple blockchain networks, including Plasma, Arbitrum, and Plume. xUSD was designed with a robust 300% collateralisation requirement, intended to protect against volatility through high overcollateralization. Essentially, this means every xUSD token was supposedly backed by three times its value in assets.

Estimated £280M in Outstanding Loans

A pseudonymous analyst, identified as YAM, estimates that outstanding loans and borrowings secured by Stream-related collateral likely exceed AUD 428.12 million (approximately £280 million). The most significant single exposure consists of AUD 128.44 million USDT borrowed on Plasma using xUSD as collateral. Presently, if xUSD’s pegged price fails to recover, positions with utilisation reaching 100% could see lending rates soar to 88%.

Concerns Over Indirect Exposure via deUSD

Crucially, the analyst noted that these figures exclude indirect exposures involving deUSD. The decentralised US Dollar (deUSD) is a fully collateralised, yield-bearing synthetic dollar powered by Elixir Network, creating additional layers of risk throughout interconnected DeFi credit markets. This interconnectedness substantially amplifies potential contagion effects.

Related Article: USDT Price Patterns: Hidden Connexion Between Tether Mints and Bitcoin Cycles

Conclusion – Stream Finance Losses

The Stream Finance crisis represents a significant shock to the decentralised finance ecosystem. This £93 million loss has certainly triggered a cascade of consequences extending well beyond the immediate platform. Most notably, the dramatic depegging of xUSD demonstrates how quickly market confidence can evaporate when fundamental questions arise about asset backing and risk management.

Stream’s swift action to engage Perkins Coie LLP underscores the gravity of the situation. Nevertheless, the damage appears substantial as evidenced by xUSD’s precipitous fall to $0.43 and the subsequent liquidity crisis across multiple platforms. The estimated £280 million in outstanding loans secured by Stream-related collateral raises serious questions about potential contagion effects throughout interconnected DeFi markets.

Stream Finance users, therefore, face an uncertain wait while the investigation progresses. The broader DeFi community, meanwhile, must reckon with yet another stress test of resilience and interconnected risk. Whether this incident leads to improved safeguards or marks another cautionary tale depends mainly on how thoroughly its causes are identified and addressed in the coming weeks.