The Stream Finance protocol pretty much came to a standstill, halting all withdrawals and deposits after a staggering $93 million loss from an external fund manager took place.
The protocol took to social media to explain the halt was implemented as a protective measure to safeguard remaining assets and conduct a thorough assessment.
“We are actively retrieving all liquid funds from external management,” the statement read. They also emphasized that no new deposits would process until stability returns.
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This isn’t just a glitch, it’s a full-blown crisis
The external manager, responsible for a portion of Stream Finance’s portfolio to boost yields, disclosed the $93 million wipeout yesterday.
Pending user funds hang in limbo, with the Defi protocol promising periodic updates as the situation evolves.
The protocol reiterated that the suspension is temporary, but for thousands of users, the uncertainty feels anything but.
High-Profile Legal Probe into Stream Finance Debacle
The firm has reportedly enlisted high-profile legal experts from Perkins Coie LLP to solve the mystery behind the $93 million vanishing act. Partners Keith Miller and Joseph Cutler, veterans in fintech, blockchain compliance, and digital asset crises, will lead the charge.
The investigation aims to ascertain culpability, trace the loss’s origins, and chart a path to recovery.
Industry watchers believe the appointment will enhance Stream Finance’s credibility, particularly after similar incidents with DeFi protocols.
The lawyers’ “comprehensive review” will also scrutinize management practices and potentially set new precedents for how protocols handle third-party custodians.
xUSD Stablecoin Plunges in Stream Finance Fallout
Meanwhile the ripples from the Stream Finance loss hit hardest on its native stablecoin, Staked Stream USD (xUSD). It tumbled to $0.53 on CoinGecko, half its $1 peg, showcasing panicked sell-offs and evaporating liquidity.
Unfortunately, this saga has ignited fierce community discourse on off-chain risks. Having said that, hopefully the incident will spur stricter governance reforms across the space.
