Stream Finance suffered a massive loss of 93 million dollars due to poor external management, leading to the immediate suspension of withdrawals and freezing of remaining funds. Perkins Coie LLP, a legal firm specializing in crypto affairs, has been tasked with conducting a thorough investigation to identify technical or human responsibilities. The fall of the xUSD stablecoin triggers a domino effect on the DeFi ecosystem, exposing over 280 million dollars in collateral.
Stream Finance and the xUSD Soar
The DeFi platform Stream Finance is facing its worst crisis yet. Nearly 93 million dollars have vanished from funds managed by an external administrator, prompting the company to urgently suspend all withdrawals.
Behind this colossal loss, an entire sector of decentralized finance is holding its breath. Stream immediately commissioned the Perkins Coie LLP firm, one of the heavyweights in American financial law, to lead a complete internal investigation.
Immediate Legal Response
Perkins Coie, known for its involvement in major crypto cases, deployed lawyers Keith Miller and Joseph Cutler, specialists in investigations related to digital assets. Their mission: trace the origin of the 93-million-dollar hole and determine the responsibilities, whether technical or human.
On X, Stream Finance attempted to reassure its community: Our decision to engage Perkins Coie reflects our total commitment to transparency and good governance.
Meanwhile, the company is gradually withdrawing all its liquid assets to secure the maximum available funds. Incoming transactions are blocked, withdrawals are impossible, and the platform promises regular updates ‘until the incident is fully resolved’.
The Domino Effect Begins
It’s not just Stream Finance that is teetering. The plummet of its tokens, especially xUSD, xBTC, and xETH, threatens other interconnected protocols. According to several analysts, over 280 million dollars in loans and collaterals are directly or indirectly linked to these assets.
The stablecoin xUSD, used as collateral on platforms like Euler, Morpho, or Silo, has lost its peg. This ‘depeg’ is explained by a brutal chain: exploit on Balancer, market panic, massive liquidations, and most notably, the discovery of recursive loan loops that artificially inflated the TVL of several protocols.
The Explosive Case of deUSD
The deUSD, a ‘yield-bearing’ stablecoin issued by the Elixir network, is now at the heart of the storm. Nearly 44% of its treasury is exposed to xUSD, making it particularly vulnerable if the situation worsens.
Elixir has stated having full redemption rights at $1 from Stream, also claiming to be ‘the only creditor to benefit from these 1-1 rights.’ An announcement that the community did not appreciate, once again noting a clear lack of transparency in DeFi.
A Crisis that Speaks Volumes About Current DeFi
The Stream Finance case reminds us how interconnected high-yield strategies can amplify systemic risks. Behind the promise of ‘risk-free’ returns, many protocols still rely on fragile chains of dependencies where the failure of a single link can cause everything to collapse.
DeFi dreamt of independence and transparency. Today, it faces its reality: complexity creates opacity, and opacity always ends up costing dearly.
