Aave faces governance clash after SEC investigation ends

Traders Union
All News
Crypto News
Aave faces governance clash

All news

Top Stories

Editors' Picks

Crypto News

Financial News

Market Voices

Billionaires

Companies

Broker News

Regulators News

Yaroslav Dmytrenko

17.12.2025

Aave faces governance clash after SEC investigation ends — SEC drops Aave Labs probe amid rising DAO tensions

Aave Labs founder and CEO Stani Kulechov announced the successful conclusion of a four-year investigation by the U.S. Securities and Exchange Commission (SEC) into the crypto company. However, Aave Labs is now beginning to share authority with the Aave DAO.

The SEC has closed its investigation into Aave Labs without taking any enforcement action or imposing sanctions on the developer of the largest lending protocol. Stani Kulechov shared the news on X, noting that “this process required significant effort and resources from our team, and from me personally as a founder, to defend Aave, its ecosystem, and DeFi as a whole.”

Loading...

The tweet was deleted by the author.

But we saved everything 🙂.

“Over the past years, DeFi has faced unfair regulatory pressure. We’re happy to put this behind us and enter a new era where builders can truly shape the future of finance. DeFi will win,” Kulechov wrote.

However, a period of calm for Aave Labs and its founder appears unlikely, as a governance dispute is emerging within the Aave ecosystem between the protocol developer and the decentralized autonomous organization (DAO).

According to Coinspot, the conflict was triggered by Aave Labs’ decision to replace DEX aggregator ParaSwap with CoW Swap. The previous ParaSwap integration included a referral model that generated fees of 15–25 basis points per transaction for the Aave DAO. These revenues no longer flow into the DAO treasury and are now directed to external counterparties.

One DAO delegate noted that with an average weekly swap volume of around $200 million, annual losses for the DAO could exceed $10 million. For the DAO, these were tangible funds previously used for protocol development, grants, and incentives.

Another example of “soft centralization”

The community is now questioning who ultimately makes decisions within the Aave ecosystem that affect the protocol’s economics. Many participants argue that such decisions should at least be coordinated with the DAO in advance or accompanied by compensatory mechanisms.

A new AAVE governance proposal seeks to grant the DAO full control over the Aave brand, domains, social media accounts, naming rights, and developer gateways. The proposal states that any non-DAO entity using aave.com, its subdomains, communication channels, or online assets should not independently control them.

While app.aave.com may be considered a product of Aave Labs, monetization of any application heavily depends on access to the Aave brand and the gateway effect of aave.com. Furthermore, private entities would be prohibited from calling themselves Aave or representing themselves as “being Aave” without a formal service agreement.

Some community members describe the situation as an example of “soft centralization,” where key financial decisions are made outside on-chain governance. While this issue is common across many ecosystems, failure to resolve the conflict could significantly undermine trust in the protocol and demand for its services.

As we wrote, Aave jumps to $203 as flow improvement supports renewed upside potential

This material may contain third-party opinions, none of the data and information on this webpage constitutes investment advice according to our Disclaimer. While we adhere to strict Editorial Integrity, this post may contain references to products from our partners.