Aave escapes SEC action after years-long DeFi probe
After nearly four years under the microscope, Aave is finally out of regulatory limbo.
The U.S. Securities and Exchange Commission has wrapped up its multi-year investigation into the DeFi lending protocol without recommending any enforcement action, according to people familiar with the matter. The probe, which kicked off in late 2021 or early 2022, examined whether Aave’s operations, and specifically its AAVE token should be treated as securities under U.S. law.
After four years, we are finally ready to share that the SEC has concluded its investigation into the Aave Protocol.
— Stani.eth (@StaniKulechov) December 16, 2025
This process demanded significant effort and resources from our team, and from me personally as the founder, to protect Aave, its ecosystem, and DeFi more… pic.twitter.com/aZeLrZz5ZQ
Reference: X (Twitter)
The answer, at least for now: no charges, no settlement, no courtroom drama.
For Aave, that’s a big deal. The closure clears one of the longest-running federal investigations hanging over a major DeFi protocol and removes the immediate risk of U.S. enforcement that could have disrupted its core lending products.
Why it matters
This isn’t just about Aave.
The decision lands amid a noticeable pullback by the SEC in 2025, as regulators quietly unwind some of the most aggressive crypto cases launched during the previous administration. Coinbase, Kraken, and Uniswap Labs have all seen investigations dropped or cases dismissed this year.
A recent New York Times investigation found that more than 60% of active crypto enforcement actions were paused, scaled back, or abandoned after Donald Trump’s inauguration on January 20. The shift has affected both major industry players and prominent Trump supporters, including the Winklevoss twins.
Behind the scenes, the change appears tied to a leadership transition at the SEC. The agency has begun signaling a move away from regulation by enforcement, lawsuits first, rules later, toward clearer policy frameworks for digital assets.
For DeFi builders, that’s the difference between operating under constant legal threat and having at least some room to breathe.
Markets haven’t celebrated-yet
Regulatory relief hasn’t translated into price strength for Aave’s token.
AAVE is still down sharply in 2025, falling roughly 60% from its year-to-date high of $377 on August 24 to about $150 over the next three months. As of Wednesday, it was trading around $183, down more than 50% for the year.
That disconnect highlights a broader theme in crypto right now: regulatory clarity may be improving, but market sentiment remains cautious.
Still, for Aave, escaping a years-long SEC investigation without penalties is about as close to a win as DeFi gets in Washington.
