Stream Finance Suspends Withdrawals and Deposits Amid $93 Million loss

Stream Finance has suspended all withdrawals and deposits following the loss of approximately $93 million in fund assets.

The incident occurred yesterday, the 3rd of November, 2025, when an external fund manager overseeing Stream funds disclosed the massive financial loss.

The decentralized finance platform announced it is engaging Keith Miller and Joseph Cutler of Perkins Coie LLP to conduct a comprehensive investigation. Stream stated it is withdrawing all liquid assets and expects to complete this process in the near term.

Yesterday, an external fund manager overseeing Stream funds disclosed the loss of approximately $93 million in Stream fund assets.

In response, Stream is in the process of engaging Keith Miller and Joseph Cutler of the law firm Perkins Coie LLP, to lead a comprehensive…

— Stream Finance (@StreamDefi) November 4, 2025

Consequently, all withdrawals and deposits will not be processed during the suspension period. The company committed to providing periodic updates as additional information emerges from the ongoing investigation. This marks the ongoing loss in the DeFi sector and in cryptocurrency generally.

Recursive Looping Controversy Preceded Loss

The incident follows recent scrutiny over Stream’s use of recursive looping strategies. The protocol had faced questions about this approach, which involves looping assets to capture interest rate spreads.

However, Stream previously explained that recursive looping allows earning enhanced yields by borrowing against assets.

For example, an asset earning 15% that can be borrowed at 10% generates progressively higher returns at increased leverage multiples.

Meanwhile, DefiLlama determined that recursive looping does not qualify as Total Value Locked under their definitions, whilst Stream disagreed with this classification but updated its website to distinguish between user deposits of approximately $160 million and total assets deployed across strategies totaling $520 million.

Over the last few days, there have been a lot of questions about recursive looping, what it is, and why we use it.

Recursive looping is when a protocol loops its own asset to capture a spread in interest rates. For example, if you have an asset earning 15% that you can borrow…

— Stream Finance (@StreamDefi) October 30, 2025

Additionally, the platform had signed engagement letters with third-party attestation companies and shared access to financial records. Stream updated its dashboard to show a detailed breakdown of fund deployment locations.

Corporate Governance Response and Investigation

Stream emphasized that retaining Perkins Coie LLP, a U.S-based law firm, reflects its commitment to transparency and robust corporate governance.

The law firm will lead the investigation into how the $93 million loss occurred under the external fund manager’s oversight.

The company stated it cannot process any transactions until fully assessing the scope and causes of the loss. All stakeholders have been instructed to await further updates before attempting deposits or withdrawals.

The suspension marks a significant operational halt for Stream Finance as it navigates the financial impact.

The platform had previously promoted its enhanced yield strategies as a way for users to earn more while accepting increased risk.

After the incident, Stream Finance’s stablecoin XUSD plunged to $0.50 and is currently below $0.30 according to CoinGecko. 

Meanwhile, the timing of the loss raises questions about the platform’s risk management practices. Stream had recently faced transparency concerns that prompted the dashboard updates and third-party attestation initiatives.

The investigation by Perkins Coie will examine the external fund manager’s actions and the circumstances leading to the asset loss.

Stream has not disclosed the identity of the external fund manager or specific details about the lost funds.

Notably, the platform’s decision to withdraw all liquid assets suggests a defensive posture while the investigation proceeds. Industry observers note this approach aims to prevent further losses and secure remaining user funds.

Stream’s increased yield insurance fund, which captured spreads from recursive looping strategies, may face scrutiny during the investigation. The extent to which these strategies contributed to the loss remains unclear.