- The SEC closed its four-year Aave investigation without taking any enforcement action.
- Aave can now operate with reduced legal risk across its core DeFi lending services.
- The decision signals softer US oversight for major decentralized finance protocols.
The U.S. Securities and Exchange Commission has closed its four-year investigation into the Aave Protocol without recommending enforcement action, according to statements from Aave leadership. The inquiry began in late 2021 or early 2022 during a period when regulators increased scrutiny of decentralized finance lending platforms and governance tokens.
The SEC examined whether Aave’s protocol structure or its AAVE token fell under U.S. securities laws. The agency’s decision removes immediate enforcement risk for one of the largest non-custodial lending platforms in decentralized finance.
Aave operates through smart contracts and supports lending and borrowing activity across multiple blockchains. The closure places Aave among several crypto firms whose long-running investigations ended without charges in 2025. The SEC did not issue a public enforcement notice or settlement related to the investigation.
As in similar cases, the agency retains authority to revisit the matter if conditions change. For now, the decision allows Aave to continue operating without near-term regulatory action in the United States. It also reduces uncertainty around the protocol’s lending products and governance framework.
Aave CEO Confirms Outcome and Details Process
Aave founder and chief executive Stani Kulechov confirmed the investigation’s conclusion in a public post on X, formerly Twitter. “After four years, we are finally ready to share that the SEC has concluded its investigation into the Aave Protocol,” Kulechov wrote. He said the process required sustained engagement with regulators and placed significant demands on the company.
“This process demanded effort and resources from our team and from me personally as the founder,” he stated. Kulechov said the company focused on protecting Aave and its wider ecosystem during the review. He also referenced the broader regulatory environment facing decentralized finance projects.
“DeFi has faced unfair regulatory pressure in recent years,” Kulechov wrote. He added that the conclusion of the probe marks a change in conditions for builders and developers. “We’re glad to put this behind us as we enter a new era where developers can truly build the future of finance,” he said. Kulechov ended the post with a brief statement: “DeFi will win.”
The announcement marked the first official confirmation that the SEC had closed its inquiry into Aave. Neither the SEC nor Aave disclosed detailed correspondence related to the investigation. The confirmation nonetheless provided clarity after years of speculation about potential enforcement outcomes.
Broader Enforcement Shift and Governance Proposal
The Aave decision follows a wider change in U.S. crypto enforcement activity during 2025. The SEC has recently dropped or dismissed several high-profile cases involving Coinbase, Kraken, and Uniswap Labs. According to reports, more than 60% of ongoing crypto cases were paused, reduced, or dismissed after January 20.
That date coincided with President Donald Trump’s inauguration and a leadership transition at the SEC. The report cited court setbacks and internal policy reviews as factors influencing the change in approach. According to the New York Times, several affected cases involved prominent industry figures and major market participants.
Related: Aave Labs Cleared by MiCAR to Launch Zero-Fee Stablecoin On-Ramp in EU
The trend reflects a move away from enforcement-led regulation and toward clearer policy direction. The SEC has not yet issued comprehensive rules for decentralized finance, though enforcement activity has slowed across the sector. Shortly after Kulechov’s announcement, a new governance proposal appeared within the Aave ecosystem.
The proposal asked AAVE token holders to assume full control of the Aave brand and related digital assets. It covered domains, subdomains, social media accounts, naming rights, and developer access points. The proposal stated that no non-DAO party should independently control these assets. It called for a governance vote to move them into a legal structure with defined protections.
The governance proposal was a consequence of the regulatory update and was in line with the decentralization objectives of Aave. Both developments indicate that one can accompany the other and that reduced regulatory pressure can lead to internal structural changes. The end of the SEC’s Aave investigation has opened up clearer boundaries within a changing U.S. regulatory framework for developers, investors, and protocol participants.
