On the 16th of December, top DeFi and crypto lending platform Aave announced that the U.S. regulator ended its four-year investigation into the protocol.
Aave CEO and founder Stani Kulechov noted that the probe drained him and the team of resources. He added,
“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. DeFi will win.”
This makes it the second DeFi protocol, after Uniswap Labs, to be let off the hook of the SEC’s scrutiny.
Aave internal struggle
Although the details of the Aave probe were not public, it could be related to allegations of operating an ‘unregistered exchange or broker-dealer’ that were brought against Uniswap and other crypto platforms.
Still, the timing was questionable.
Based on the shared SEC letter, the regulator concluded the investigation and communicated this to the team in mid-August.
However, Aave’s Kulechov only revealed the relief four months later. Coincidentally, the announcement was made at a time when the CEO had been under community scrutiny for undermining the AAVE token’s value accrual.
Critics claimed that the CEO and Aave Labs were siphoning approximately $10M from the DAO’s potential revenues that could be directed to AAVE token buybacks.
In fact, one Kulechov supporter claimed that the DAO couldn’t have afforded the legal fees if it were sued. This was a subtle flex on who calls the shot at the protocol and further illustrated the internal struggle.
Whether the SEC update was a way to deflect the debate and calm down community backlash can’t be established.
Aave’s 2026 plan
Still, Aave Labs and the founder have made a significant contribution to Aave protocol development, with an ambitious roadmap for 2026.
At the top of the list will be tokenization via Horizon, the Aave app to scale adoption, and Aave V4 with unified liquidity.
As of writing, Aave remains the top lending protocol with over $800 million in fees this year or 52% of the entire lending market.
That being said, the AAVE token shed about 4% after the update and slid further $183 at press time.
Despite the sell-off, Binance Altcoin Netflow showed that AAVE was among the tokens that were moved off the platform, suggesting an accumulation spree as the price remained below $200.
Final Thoughts
- Aave’s founder said that the protocol can now focus on scaling after the SEC dropped its 4-year investigation.
- Despite the recent AAVE token sell-off, there is an ongoing accumulation trend on the Binance platform.
