SEC Drops Long-Running Investigation Into Aave Protocol
The US Securities and Exchange Commission has closed its investigation into the Aave Protocol with out recommending enforcement motion, in accordance with a discover dated December 16.
The determination ends a multi-year probe into one of many largest decentralized finance (DeFi) lending platforms and removes a significant regulatory overhang for the sector.
Investigation Closed Without Enforcement
In its discover, the SEC mentioned it had concluded its investigation into the Aave Protocol and doesn’t intend to advocate enforcement motion presently.
However, the company emphasised that the closure doesn’t represent an exoneration and doesn’t stop future motion ought to circumstances change. The discover follows standard SEC practice beneath Securities Act Release No. 5310.
The investigation started round 2021–2022, throughout a interval when the SEC intensified scrutiny of crypto lending, staking, and governance tokens.
Aave, a non-custodial DeFi protocol, permits customers to lend and borrow digital belongings by means of automated sensible contracts. The protocol operates with out intermediaries and is ruled by holders of the AAVE token.
Aave Revenue and Governance Under the Spotlight
The SEC determination comes as Aave faces separate internal scrutiny over revenue and governance.
Earlier this week, DAO members raised considerations {that a} front-end infrastructure change might have redirected swap payment income away from the Aave DAO treasury. The difficulty adopted a shift from ParaSwap to CoW Swap on Aave’s official interface.
Governance delegates mentioned the change may cut back DAO revenue by as much as $10 million yearly, relying on buying and selling volumes.
Aave Labs responded that the front-end is a separate product and that prior income sharing was voluntary.
For now, Aave emerges from regulatory scrutiny with out penalties, which has been a standard sample because the SEC backtracks from crypto enforcement beneath Paul Atkins.
Still, the protocol faces ongoing questions round governance, decentralization, and worth seize as DeFi matures.
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