Aave Cleared by SEC, but Governance Strife and Token Weakness Persist

Aave cleared of SEC probe — but market reaction and governance tensions persist Aave said on December 16 that a U.S. regulator has closed a four‑year investigation into the protocol, a development CEO and founder Stani Kulechov described as a huge relief. “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,” Kulechov wrote on X. Regulatory and timing context - The closure makes Aave the second major DeFi project to be released from SEC scrutiny after Uniswap Labs. The specific focus of the probe was not made public; it may have related to the same “unregistered exchange or broker‑dealer” questions levied at other platforms. - According to a shared SEC letter, the agency informed Aave of the conclusion in mid‑August, but the team only disclosed the outcome four months later. That delay has drawn attention given the internal tensions that have recently surfaced around protocol governance. Governance row and accusations of value leakage - The announcement arrived amid heated debate in the Aave community. Critics have accused Kulechov and Aave Labs of diverting roughly $10 million in potential DAO revenues that critics say could have been used for AAVE buybacks to support token value. - Supporters countered that Aave Labs fronted legal costs and argued the DAO would have struggled to cover litigation expenses on its own — a point opponents say underscores who ultimately controls key decisions and resources. - Whether the public SEC update was timed to ease community pressure cannot be determined from available information. Product roadmap and fundamentals - Despite the dispute, Aave Labs and its founder continue to push development: Aave’s road map for 2026 prioritizes tokenization via Horizon, wider adoption through the Aave app, and Aave V4, which promises unified liquidity across markets. - On fundamentals, Aave still leads the lending sector. Token Terminal data shows the protocol has generated more than $800 million in fees this year — about 52% of the total lending market. Market reaction and accumulation signals - The AAVE token dipped roughly 4% after the disclosure and was trading near $183 at press time. - On‑chain flows suggest accumulation: CryptoQuant’s Binance Altcoin Netflow flagged AAVE among tokens being withdrawn from the exchange, which can indicate buyers moving tokens into custody rather than selling. Bottom line Aave’s regulatory cloud has been lifted, but governance questions and token price weakness mean the story isn’t over. The next tests will be execution on the 2026 roadmap and whether on‑chain and market behavior reflect renewed investor confidence. Sources: Aave/X, Token Terminal, CryptoQuant. This article is informational and not investment advice; always do your own research before trading. © 2025 AMBCrypto Read more AI-generated news on: undefined/news