SEC Closes Investigation into Aave After Four-Year Review: Findings Released

SEC Closes Investigation into Aave After Four-Year Review: Findings Released

The U.S. Securities and Exchange Commission (SEC) has officially wrapped up its multi-year investigation into the Aave Protocol, deciding not to recommend any enforcement actions.

This decision marks the end of nearly four years of regulatory ambiguity for one of the most prominent lending platforms within the decentralized finance (DeFi) sector.

On August 12, Aave's founder and CEO Stani Kulechov announced the outcome in a public statement.

Key Insights

The SEC has concluded its investigation into Aave without pursuing enforcement action.
The investigation began around late 2021, coinciding with increased scrutiny of DeFi platforms.
Aave actively cooperated with the SEC throughout the investigation.
The decision alleviates regulatory concerns surrounding Aave's operations and token.
Similar high-profile crypto investigations are being resolved without charges as the SEC shifts its approach.

Aave's Journey Through Regulatory Scrutiny

The investigation into Aave was initiated around late 2021 or early 2022, marking a time when the SEC heightened its scrutiny of decentralized finance platforms. Initially, the SEC began broadening its enforcement actions beyond centralized exchanges to also encompass protocols related to lending, borrowing, and liquidity functions that operate without traditional intermediaries.

While the SEC did not publicly specify the issues at hand, many industry analysts speculated that the investigation focused on whether the AAVE token or certain aspects of Aave’s operations fell under U.S. securities law and if any registration requirements were needed.

Throughout this period, Aave maintained a collaborative stance with regulators, engaging extensively with SEC personnel. In June 2025, representatives from Aave met with members of the SEC’s Crypto Task Force to discuss regulatory frameworks, although it remains unclear if those discussions influenced the recent closure of the inquiry.

Kulechov noted that this drawn-out investigation demanded considerable time and resources from both himself and the organization. He described this period as one of persistent regulatory pressure not only for Aave but across the entire DeFi landscape.

Typically, when investigations conclude without any enforcement actions, the SEC does not issue any formal findings or allegations related to the inquiry. In this case, the SEC informed Aave that it did not plan to recommend any enforcement action in connection with the inquiry referred to as “HO-14386.” However, the SEC did include a disclaimer indicating that this decision should not be seen as a complete exoneration nor does it preclude the agency from reconsidering the matter in the future.

The SEC has kept its ability to act swiftly when issues of investor protection arise, adhering to flexible procedural standards that help avoid unnecessary delays in enforcement actions.

Recently, the Aave (AAVE) token peaked at $194 before settling at $187.67, reflecting a 2.4% increase over the past 24 hours.

Aave Price Movement

For Aave users, this conclusion signifies that the protocol can continue functioning without immediate worries about U.S. enforcement actions related to this lengthy investigation. This outcome also alleviates regulatory uncertainty concerning Aave’s core offerings, boosting user confidence regarding the platform's continued accessibility and stability in the near future.

Shift in SEC's Approach to Cryptocurrency

Aave’s resolution is among a growing number of high-profile cryptocurrency inquiries that have concluded without any charges in 2025. Earlier in December, Ondo Finance revealed the SEC had also ended its multi-year probe into its tokenized real-world asset products and the ONDO token.

The overall enforcement environment has transformed significantly since the beginning of 2025. The SEC has withdrawn or dismissed cases involving various crypto entities, such as Coinbase, Kraken, Robinhood, OpenSea, Uniswap Labs, Consensys, Crypto.com, and several others. Many of these cases were withdrawn with prejudice, which prevents the SEC from re-initiating the same claims.

This shift follows a leadership change at the SEC alongside a commitment to move away from regulation through litigation, towards providing clearer policy guidelines. A review by The New York Times noted that no new federal court cases related to cryptocurrencies have been initiated by the SEC recently. Ultimately, the agency has backed away from over half of the inherited crypto cases, either dismissing them, pausing proceedings, or yielding significant legal points.