The decentralized finance platform Stream Finance announced that it has suspended deposits and withdrawals after an external fund manager responsible for its funds discovered a loss of $93 million.
The Stream Finance team stated in a post on X on Monday that the fund manager reported the loss on Sunday, and the project subsequently hired lawyers from Perkins Coie to investigate the matter.
"We are actively extracting all liquid assets, and this process is expected to be completed in the short term," it stated. "As more information becomes available, we will provide regular updates."
During the investigation of the issue by Stream Finance, the platform has temporarily suspended withdrawals and will not process any pending deposits.
Stream Finance is a yield-focused circular staking DeFi platform that also has a collateral-backed stablecoin called Staked Stream USD (XUSD).
Before Stream Finance's announcement on the X platform on Monday, XUSD had already begun to drop below $1, with users noticing anomalies on Sunday and questioning the team's decision to suspend deposits and withdrawals without prior communication.
Omer Goldberg, founder of Labs, pointed out in a post about 10 hours before the official announcement from Stream that XUSD had significantly de-pegged below the target range after the automated market maker Balancer suffered an attack exceeding $100 million.
According to data from CoinGecko, XUSD had dropped to a low of $0.51 at the time of writing.
Last Friday, community members raised questions about the discrepancy between the total value locked (TVL) displayed on the official website and the statistics from mainstream data service DefiLlama. In response, Stream Finance stated on the X platform:
"DefiLlama does not consider circular staking in its TVL based on its own definition. We disagree with this, but to be transparent with users, the official website has now distinguished between user deposits (approximately $160 million) and total assets deployed across various strategies (approximately $520 million)."
Minal Thurkal, head of DeFi ecosystem growth at CoinDCX, stated: "This highlights the importance of fully understanding how protocols generate yields and the significant risks involved in complex DeFi strategies, especially in cases where there are discrepancies with standard metrics like those from DefiLlama."
Related: Opinion: Fintech companies and new banks are driving stablecoin adoption into a new era
Original article: “Stream Finance Suspends Platform Operations After Discovering $93 Million Loss”
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