Stream Finance, a significant player in the DeFi altcoin sector, announced a temporary suspension of all withdrawals and deposits. This decision followed the revelation of an approximately $93 million loss of the assets it manages. In a statement made earlier today, the protocol expressed that following a report from an external fund manager about the loss, the process of withdrawing the remaining liquid assets had been initiated and was expected to be completed swiftly.
Stream Finance’s Loss Announcement and Review Process
Stream Finance disclosed the loss through its social media account, noting that an external fund manager reported a $93 million loss in protocol assets. Until the full extent and causes of the loss are identified, all withdrawal and deposit activities are suspended. In the interim, pending investments will not be processed. The protocol’s statement emphasized that the process for withdrawing remaining liquid funds is being expedited to safeguard assets and assess user losses.
To investigate the legal and technical facets of the incident, Stream Finance has appointed Keith Miller and Joseph Cutler from Perkins Coie LLP, a law firm renowned for its expertise in fintech consulting, particularly in regulation, compliance, and cybersecurity. Regular updates will be shared with the public upon the completion of the review process.
Plummeting Value of xUSD Exacerbates Panic
Following these developments, the value of Staked Stream USD (xUSD), a stablecoin linked to the Stream Finance ecosystem, plummeted dramatically. Blockchain security firm PeckShield detected that xUSD had depegged from its fixed value, with CoinGecko data indicating its value slumped to $0.53 by 07:50 AM (TSI) on Tuesday. This price drop triggered broader concerns about liquidity crises and trust among users.
The measures taken by Stream Finance have renewed discussions about risk management in the DeFi ecosystem. Experts underscore the necessity for a new security layer to control external fund managers’ access in decentralized finance protocols. Depending on the outcome of the review, Stream Finance is anticipated to implement new regulations regarding its future strategy and the security of user funds.