SEC Ends Four-Year Investigation Into Aave Protocol

The US SEC formally closes its four-year investigation into Aave Protocol, easing regulatory pressure and offering clearer conditions for DeFi developers.

The US Securities and Exchange Commission has formally concluded its four-year investigation into the Aave Protocol, according to founder Stani Kulechov. The decision is a notable moment for the use of decentralized finance, which has been under steady regulatory scrutiny for the last several years. Importantly, the closure eliminates long-standing uncertainty about one of the biggest lending platforms in the sector.

SEC Closes Aave Probe Without Enforcement Action

The development was confirmed by Stani Kulechov in a post that he shared on X. He said the SEC had “concluded its investigation” after almost four years. Moreover, he said the agency does not intend to recommend any enforcement action against the protocol, taking the matter off the table.

Kulechov stressed that the investigation required a lot of time and resources. According to him, the process required a long-term legal and operational attention from both the people at Aave and from himself personally. Nevertheless, he said the conclusion gives the ecosystem a chance to carry on with more confidence and clarity.

In the same post, Kulechov provided a screenshot of the letter of August 15, 2025. The letter says that the SEC staff does not intend to take any enforcement action against the Aave Protocol. As a result, the protracted probe concludes without charges, fines, or required changes to the platform.

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The letter also refers to a Wells Notice given earlier in the process. Typically, a Wells Notice advises a company that SEC staff can recommend enforcement action. However, in this case, no following recommendation, which brings up a notable outcome for a major DeFi project.

Aave Joins Ripple and Ondo as SEC Closes Crypto Investigations

Although the SEC is less likely to make public comments about investigations that have closed without action, industry observers point to common themes. Generally, the DeFi investigations are based on the status of the tokens (whether they are securities) or whether the lending activities need to be registered. Still, the agency has not disclosed specific concerns as it relates to Aave.

The closure is in line with other recent developments in the regulation. Earlier this month, Ondo Finance revealed that the SEC had shut down an investigation started by the previous US administration. Similarly, Ripple and a number of other crypto companies have left prolonged periods of regulatory scrutiny.

Under the previous Presidential government, the SEC has taken a conservative approach when it comes to digital assets. During the time period the agency targeted various high profile cases against various crypto companies, most of them focused on the registration and disclosure requirements. Consequently, long investigations became a hallmark of the regulatory environment.

Market participants are keenly watching the effect that these closures have on sentiment. The AAVE token is currently trading at a value of about $196.52 with a market cap of more than $3 billion. Over the past 7 days, the token has gotten about a 3.93% gain, according to market data.

Overall, the end of the Aave investigation is seen as a positive indicator of decentralized finance. While there is still regulatory oversight, the lack of enforcement action indicates a possible move toward greater clarity of boundaries. As a result, developers and investors could be pleased with the conditions for responsible innovation throughout the DeFi sector.