After Wasting Four Years, SEC Ends Yet Another Crypto Investigastion

The SEC has officially dropped its investigation into the Aave protocol. 

“DeFi has faced unfair regulatory pressure in recent years. We’re glad to put this behind us as we enter a new era where developers can truly build the future of finance,” Aave Founder Stani Kulechov said in a recent social media post. 

A four-year probe

The core of the SEC’s crypto strategy has been to classify tokens as securities by proving they rely on the “managerial efforts” of a centralized group. 

After four years of digging, the SEC evidently could not find sufficient evidence of clear securities violations to warrant a lawsuit. 

The regulatory environment in the U.S. has softened significantly in late 2025. 

Since Paul Atkins took over as SEC Chair in early 2025, the agency has shifted away from “regulation by enforcement.” Similar investigations into Uniswap and Ondo Finance were also dropped earlier this year.

The agency is likely deprioritizing cases against “true DeFi” protocols that don’t hold user funds directly.

The bad news 

The regulatory news is undeniably bullish, but Aave is currently facing a significant internal crisis that complicates the picture.

Aave Labs recently integrated “CoW Swap” into the Aave frontend and began redirecting swap fees (estimated at ~$10 million/year) to themselves rather than the DAO treasury.

Token holders are furious, viewing this as a “revenue capture” by the development team that bypasses decentralized governance.

If this governance spat isn’t resolved, it could lead to a “fork”.