Yeliz Akmaca 
The U.S. Securities and Exchange Commission (SEC) has officially ended its four-year investigation into Aave Protocol without taking any enforcement action. The decision arrives at a sensitive moment, as Aave Labs continues to face internal debate with DAO members over revenue flows and CoW Swap fee allocation.
SEC Closes Aave Probe After Years of Scrutiny
Aave founder Stani Kulechov confirmed the development in a post on X, stating that the SEC has formally concluded its inquiry. He described the process as resource-intensive, noting the prolonged regulatory pressure placed on both the team and the broader DeFi ecosystem.
“This demanded enormous effort over several years. We’re relieved to move forward and focus on building the future of finance,” Kulechov said, adding, “DeFi will win.”
According to the notice sent to Aave, the SEC’s Division of Enforcement does not intend to recommend enforcement action related to the investigation. The case, internally referenced as “HO-14386,” was closed following standard Commission procedures.
The regulator did not publish findings or allegations, and reiterated that the closure does not constitute an exoneration. The SEC also maintained that it retains the authority to reopen the matter if future investor protection concerns arise.
AAVE Price Shows Muted Reaction
Despite the regulatory clarity, AAVE’s market response remained subdued. TradingView data shows the token trading near $188, down roughly 3% over the past 24 hours.
The token briefly dipped to $185 amid broader crypto market weakness. Analysts suggest that the outcome was partially priced in, while ongoing DAO governance tensions continue to weigh on investor confidence.
DAO Tensions Continue Over CoW Swap Fees
While regulatory pressure has eased, internal disputes within the Aave ecosystem remain unresolved. Reports alleging that Aave Labs diverted CoW Swap surplus fees away from the DAO treasury sparked renewed debate among token holders.
Kulechov addressed the claims directly, stating that CoW Swap surplus revenue originates outside the core protocol and represents a separate product feature. He emphasized that Aave Labs plans to share this revenue with the DAO.
“Claims of undisclosed revenue are false information,” he said, also rejecting allegations related to Horizon RWA revenues. According to Kulechov, Horizon continues to generate income for the DAO treasury.
He further noted that Aave Labs has spent the past five years building products on top of the protocol to expand revenue streams and ecosystem growth.
“The revenue narrative is outdated in a market racing toward scale,” Kulechov added. “It’s time to focus on growth, including AAVE buybacks, to expand the overall pie.”
Behind the SEC’s Aave Decision
The investigation into Aave began in late 2021 or early 2022, during a period when the SEC expanded its enforcement focus from centralized exchanges to decentralized lending and liquidity protocols.
Industry observers long believed the inquiry centered on whether the AAVE token qualified as a security under U.S. law and whether the protocol triggered registration requirements.
Throughout the process, Aave engaged with regulators and participated in multiple discussions. In June 2025, representatives met with members of the SEC’s Crypto Task Force, though the agency has not confirmed whether those talks directly influenced the closure decision.
As is typical in cases resolved without enforcement, the SEC offered no public explanation beyond its standard disclaimer. The agency reiterated its flexible approach to enforcement, prioritizing investor protection and rapid intervention when necessary.
What This Means for DeFi
The SEC’s decision marks a rare moment of regulatory relief for decentralized finance. For market participants, it reduces uncertainty around token classification and lowers perceived legal risk tied to DeFi lending protocols.
However, governance transparency and revenue alignment remain critical challenges. Until DAO disputes are resolved, analysts expect cautious positioning from both retail and institutional investors.
The next phase for Aave is likely to be defined not by regulators, but by how effectively the protocol aligns growth strategy, governance, and capital allocation.
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