- SEC ends four year investigation and takes no action against Aave protocol.
- AAVE token stays around $188 after SEC announcement and market dip.
- Aave Labs clarifies revenue flows and continues developing DeFi products.
The U.S. Securities and Exchange Commission (SEC) has closed its nearly four-year investigation into the Aave Protocol. The probe examined whether the AAVE token and the platform’s operations violated U.S. securities laws. The SEC decided not to recommend any enforcement action against the DeFi protocol.
This decision removes immediate regulatory risk for Aave and reduces uncertainty around its core products. The conclusion comes as a series of crypto investigations in 2025 have ended without charges, including cases involving Coinbase, Kraken, and Uniswap Labs.
AAVE Price Reaction
Despite the SEC announcement, the AAVE token showed minimal market movement. According to TradingView, AAVE trades around $188, which is a decline of about 3% in 24 hours. It dropped to $185 earlier in the day as part of a wider crypto market drop.
The token is still lower by more than 51% since the peak of $377 in late August. According to market analysts, the undertone response can be attributed to continuous volatility and fear of governance in DeFi, and not regulatory clarity.
Internal Disputes and Revenue Management
Aave Labs has faced internal scrutiny over the management of CoW swap fees and Horizon RWA revenues. Recent reports suggested that revenue was diverted from the DAO treasury. Aave Labs clarified that CoW swap fees are generated outside the main protocol and will be shared with the DAO.
Horizon RWA revenue continues to flow to the treasury. Over the past five years, Aave Labs has managed the protocol’s revenue streams while developing products aimed at long-term growth. Analysts note that revenue generation alone is secondary to expansion strategies in DeFi ecosystems.
Regulatory Landscape and Industry Context
The SEC’s approach to crypto regulation appears to be shifting. Multiple high-profile cases have been dropped, paused, or reduced after early 2025 leadership changes. In April, SEC ended the CyberKongz case with no charges showing a shift in crypto regulation strategy.
A New York Times investigation found that over 60% of ongoing crypto cases faced adjustments following the presidential transition. Industry experts say the shift signals a move from aggressive litigation to clearer policy guidance.
In the case of DeFi protocols, such as Aave, this gives them greater operational stability and an incentive to grow without the imminent regulatory risk. The SEC shutdown underscores the changing dynamic between the regulators of the United States and decentralized finance. The shutdown caused the SEC to miss a couple of deadlines.
