Stream Finance collapse triggers a wave of DeFi scams, with a single victim losing over $100 million in assets frozen

A legendary DeFi scam shocked the entire crypto ecosystem in November 2024. According to BlockBeats, due to the sudden collapse of the DeFi protocol Stream Finance, a whale investor holding over $100 million in assets on the platform was unable to withdraw funds. Currently, the platform has not provided any solutions. This incident is one of the largest single-victim cases in DeFi scam history, exposing systemic vulnerabilities across the ecosystem.

The victim told BlockBeats that they only learned in early November from news sources that Stream Finance’s official Twitter disclosed a loss of $93 million, which made them realize the protocol was in a repayment crisis. They immediately attempted to withdraw, only to find that the protocol’s liquidity had been completely drained, and their funds were frozen indefinitely.

Chain of Frozen Assets Across Multiple DeFi Protocols

The victim’s assets are spread across several well-known DeFi protocols. Public address tracking shows that three addresses on Euler hold about $82 million USDT in total, and they also have 233.3 BTC (roughly $24.5 million) in Silo. These funds are across multiple protocols, but now all are frozen, with total trapped assets exceeding $107 million.

Specific freezing details are as follows:

• Address 0xa38d6e3aa9f3e4f81d4cef9b8bcdc58ab37d066a frozen $57 million USDT on Euler
• Address 0x0c883bacaf927076c702fd580505275be44fb63e frozen $3.8 million USDT on Euler
• Address 0x673b3815508be9c30287f9eeed6cd3e1e29efda3 frozen $22 million USDT on Euler
• Address 0x5f8d594f121732d478c3a79c59bcd02823b6e7a3 frozen 233.3 BTC in Silo

Currently, Stream Finance has disabled deposits, causing the mechanism designed to release withdrawal limits—dependent on new funds entering—to become completely ineffective. Since the team’s last tweet on November 4, no further updates or solutions have been announced, leaving investors in despair.

In multiple advocacy groups, investors are attempting unconventional methods to access limited liquidity, even resorting to “bot sniping.” Some investors, trusting others’ technical assistance, transferred deposit certificates, which led to further asset loss and community chaos.

$285 Million Risk Exposure Chain Behind the DeFi Scam

Independent DeFi analyst YieldsAndMore’s in-depth research reveals the staggering scale of this crisis. The collapse of Stream Finance is not an isolated event but involves multiple layered protocols within the DeFi ecosystem. Data shows that the debt exposure among involved protocols reaches up to $285 million, with TelosC ($123.6 million), Elixir ($68 million), and MEV Capital ($25.4 million) being the most closely linked.

Of particular concern is the deUSD stablecoin risk in the Elixir protocol. Elixir had lent out $68 million USDC to Stream, accounting for about 65% of deUSD’s total reserves. If the underlying assets default, this highly concentrated risk exposure could trigger a chain collapse.

Due to the decentralized design of protocols like Euler, Morpho, and Silo, intervention options are extremely limited. Without centralized governance, these protocols find it difficult to quickly implement rescue measures. Multiple legal teams are preparing lawsuits, but the progress and recovery prospects remain uncertain. For trapped investors, the only current option is to stay updated through official channels, as asset unfreezing timelines are currently unknown.

How DeFi Composability Becomes a Double-Edged Sword

This DeFi scam again exposes systemic issues within the ecosystem. Recursion leverage, protocol contagion, and poor risk management are core industry pain points. Although the Stream team claimed their positions had “full redemption rights per dollar,” this promise completely failed in extreme market conditions—dependent on the liquidity and solvency of underlying assets. Once the foundational assets default, such promises are rendered meaningless.

What’s more alarming is the black hole in risk disclosure. Creditors can only learn about the full risk exposure network through post-hoc third-party analysis, revealing major flaws in transparency and real-time auditing within the current DeFi ecosystem.

DeFi’s composability is indeed a double-edged sword. During bullish markets, this ability to combine protocols can efficiently recover capital and boost yields; but when risks materialize, this interconnectedness becomes a rapid transmission channel, allowing crises to propagate through multiple layers of protocols, forming complex risk exposure networks. Ultimately, this can lead to large-scale DeFi scams like this one. The crisis underscores the urgent need for better risk isolation mechanisms and real-time monitoring systems in DeFi.