Stream Finance Faces $93 Million Loss later than xUSD Stablecoin Depeg
Stream Finance, a decentralized finance (DeFi) platform, has reported a $93 million loss following the depeg of its stablecoin xUSD and its staked counterpart, sXUSD. The incident has raised significant concerns across the crypto community, prompting Stream Finance to suspend deposits and withdrawals while an internal and legal investigation is underway.
According to the Stream Finance team, the losses stem from an external fund manager whose trading activity contributed to a collapse in xUSD’s peg stability. The platform has hired attorneys Keith Miller and Joseph Cutler from Perkins Coie LLP to overview the legal and financial review process. The firm aims to determine accountability and explore recovery options for affected users.
xUSD, previously marketed as a dollar-pegged stablecoin backed by diversified DeFi yield strategies, began losing its peg earlier this week. On-chain data revealed sharp deviations from the $1 benchmark, with prices for xUSD and sXUSD dropping significantly across decentralized platforms and liquidity pools. The depeg led to widespread user panic and heavy withdrawal requests before the platform froze activity.
ahead warnings from analysts
Several on-chain analysts and DeFi traders had raised concerns about xUSD’s leverage exposure in the days preceding the event. Prominent trader CBB0FE and others alleged that xUSD’s collateral reserves were insufficient to support its circulating supply, warning that even modest volatility could trigger a liquidity crunch. These warnings now appear prescient as the xUSD mechanism struggled to maintain parity amid increased redemptions and declining asset support.
Stream Finance acknowledged that the external fund manager held a key role in managing portfolio allocations and exposure, but claims the losses were only disclosed later than the depeg had begun. The team emphasized its commitment to transparency and user protection, adding that it is working closely with auditors and legal counsel to determine the extent of the damage and potential recovery paths.
Regulatory and operational implications
The $93 million loss and xUSD depeg mark one of the most significant stablecoin disruptions in 2025, reigniting concerns over off-chain fund exposure and opaque management practices in DeFi ecosystems. Analysts note that the case highlights persistent vulnerabilities in protocols that rely on third-party asset managers rather than fully on-chain collateralization.
Perkins Coie’s involvement suggests Stream Finance may pursue restitution or legal recourse against the fund manager. The law firm is also expected to assist in liaising with regulators as authorities monitor the situation’s broader impact on stablecoin trust and liquidity in DeFi markets.
The xUSD depeg has caused ripple effects across DeFi platforms integrated with Stream’s liquidity network. Arbitrage traders have attempted to exploit price imbalances, while liquidity providers are facing significant impermanent losses. Despite temporary stabilizations, xUSD remains below its intended peg, and confidence in the asset remains fragile.
Stream Finance has not provided a timeline for resuming operations but reassured users that all affected balances are under review. The platform’s team is preparing a detailed post-mortem and has promised to publish updates as the investigation progresses.
The Stream Finance incident underscores the ongoing risks tied to hybrid DeFi models that mix decentralized protocols with off-chain fund management. As the sector matures, transparency, collateral clarity, and decentralized risk controls remain crucial to maintaining stability and user trust in the digital asset ecosystem.
