SEC Drops 4-Year Aave Investigation Following ‘Significant’ Defense Battle: Report

The U.S. Securities and Exchange Commission has formally concluded its multi-year investigation into the Aave Protocol without recommending any enforcement action.

This action puts an end to almost four years of regulatory uncertainty surrounding one of the most widely used credit platforms in the decentralized finance sector.

Aave founder and CEO Stani Kulechov revealed the outcome in a public post on August 12.

Aave survived the SEC crackdown on DeFi – here’s what happened behind the scenes

The investigation into Aave began in late 2021 or early 2022, during a period of heightened scrutiny of decentralized finance platforms.

At the time, the SEC expanded its enforcement focus beyond centralized exchanges to include protocols that offered credit, lending and liquidity services without traditional intermediaries.

While the SEC has not publicly outlined the scope of its concerns, industry observers have long assumed the investigation focused on whether the AAVE token or aspects of the protocol’s operations were subject to U.S. securities laws and whether any registration requirements applied.

Throughout the investigation, Aave cooperated with regulators and worked with SEC staff for several years.

In June 2025 Aave represented meet with members of the SEC’s Crypto Task Force to discuss the regulatory approach, although the agency did not indicate whether these discussions were related to the shutdown decision.

Kulechov said the process required significant efforts and resources from both the company and him personally, describing the investigation as a prolonged period of regulatory burden not only for Aave but for decentralized finance more broadly.

As is common in cases that end without enforcement, the SEC has not published any findings or allegations related to the investigation.

The letter stated that as of that date, staff had no intention of recommending any enforcement action to the Commission in connection with the investigation identified internally as “HO-14386.”

The communication followed standard SEC practice and included a disclaimer that the decision should not be construed as a waiver and will not prevent the agency from reopening the case in the future.

The SEC has consistently maintained the flexibility to act quickly when investor protection concerns arise, avoiding rigid procedural rules that could delay enforcement.

Notably, earlier today, the Aave (AAVE) token reached a high of $194 before falling to a low of $184. The token has since stabilized at $187.67, marking a gain of 2.4% in the past 24 hours.

For Aave users, this means the protocol can continue to function without the immediate risk of U.S. enforcement actions related to the long-running SEC investigation.

It also reduces regulatory uncertainty surrounding Aave’s core products, giving users greater confidence that the platform will remain accessible and stable in the near term.

Is the SEC done cracking down on crypto? Large cases are closed without costs

Aave’s case is the latest in a growing list of high-profile crypto investigations that closed without charges in 2025.

In December, Ondo Finance announced that the SEC had ended its own multi-year investigation into the company’s tokenized real-world asset products and its ONDO token.

The broader enforcement landscape has changed significantly since early 2025, as the SEC has dropped or dismissed cases and investigations involving Coinbase, Kraken, Robinhood, OpenSea, Uniswap Labs, Consensys, Crypto.com, and several other companies.

Many of these actions were withdrawn with prejudice, preventing the agency from re-filing the same claims.

The change followed a leadership transition at the SEC and a pronounced move away from regulation through litigation toward developing clearer policy guidelines.

A review published earlier today by The New York Times found that the SEC has not filed any new crypto-related federal lawsuits.

Of the crypto cases inherited from previous administrations, the agency withdrew from more than half, either dismissing them, suspending proceedings or conceding key issues.

The post SEC scraps four-year Aave investigation after ‘significant’ defense battle: report appeared first on Cryptonews.

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