Stream Finance Halts After $93 Million Loss and Stablecoin Collapse
Decentralized finance platform Stream Finance has suspended operations after reporting a massive loss of $93 million. The incident caused the project’s native stablecoin to lose its dollar peg, plummeting to $0.50 within hours.
How the incident unfolded
The project’s external fund manager first reported the losses early this week, triggering a liquidity crisis and a sharp depeg of Stream USD (SUSD). The team quickly announced an emergency shutdown of operations to secure remaining assets and prevent further drain.
In an official statement, the developers said they had hired the international law firm Perkins Coie to conduct an independent investigation. “We are actively withdrawing all liquid assets and expect to complete this process shortly. Periodic updates will follow as new information becomes available,” the team wrote on its community channel.
The stablecoin depeg and market reaction
Following the announcement, Stream’s stablecoin fell by over 50 % on decentralized exchanges, dropping from $1 to around $0.50. Liquidity providers withdrew funds en masse, and automated market makers registered a series of panic swaps as users rushed to exit the protocol.
Analysts say the loss may stem from a combination of liquidity mismanagement and unsecured smart-contract operations in the fund’s yield strategy. However, no official confirmation has been issued yet.
Legal and regulatory implications
The choice of Perkins Coie — a law firm known for advising major crypto companies and blockchain consortia — indicates that Stream Finance is preparing for possible litigation and regulatory review.
DeFi losses of this scale often raise questions of fiduciary responsibility, especially when third-party fund managers handle on-chain capital. Industry observers expect further scrutiny from financial authorities given the size of the loss and its impact on retail investors.
Impact on the DeFi ecosystem
The incident has reignited debates about the risk management of algorithmic stablecoins and cross-protocol liquidity pools. Total value locked (TVL) in Stream Finance fell by over 90 % in 24 hours, with similar platforms seeing spikes in withdrawals amid fears of contagion.
Market participants are comparing the event to the collapse of TerraUSD (UST) in 2022, although the scale of Stream’s loss is smaller and appears contained within its own ecosystem.
Outlook and next steps
Developers say they will continue to cooperate with investigators and publish a post-mortem report after recovering remaining funds. For users, however, the future looks uncertain until the extent of recoverable assets is known.
Industry analysts believe the Stream Finance case will become a major reference point for DeFi regulation in 2026, especially regarding transparency requirements for off-chain fund management within decentralized protocols.
Conclusion
The $93 million loss at Stream Finance underscores the ongoing fragility of DeFi infrastructure when on-chain and off-chain finance intersect. As the project struggles to recover, its fate could influence future regulatory frameworks and user trust across the broader decentralized finance landscape.
Editorial Team — CoinBotLab