SEC Closes Four-Year Investigation Into Aave Protocol; Will Price Rebound?

• AAVE price faces major support breakdown amid the formation of an inverted flag pattern.
• The U.S. SEC has officially concluded its four year investigation on AAVE Protocol, shutting regulatory uncertainty for future endeavors.
• In the 4-hour time frame chart, a potential bearish crossover between the 50-and-200-day EMA slope, reinforces the bearish momentum in price.

The AAVE price is down 2.77% during Tuesday’s U.S. market hours, following the intraday selling pressure on altcoins. Despite the short downtick, the market watcher has reverted their focus to this asset as AAVE founder Stani Kulechov has just disclosed that the U.S. The Securities and Exchange Commission has officially concluded a four year investigation on AAVE protocol. The move is expected to reduce uncertainty, foster a clearer regulatory environment for development and drive a bolster price recovery.

U.S. SEC Concludes Multi-Year Probe of Aave Protocol

The U.S. Securities and Exchange Commission has completed its four-year investigation of the Aave Protocol without recommending any enforcement action.

Stani Kulechov, the founder of the AAVE protocol disclosed the development on X platform as he shared an image of SEC’s closure letter on December 16, 2025.

In 2021, Authorities launched the probe amid broader regulatory scrutiny of decentralized finance (DeFi) platforms during the Biden administration’s enforcement-focused approach to cryptocurrency projects. The investigation was focused to verify is aspect AAVE protocol, including its governance token (AAVE), liquidity mechanisms and overall operation comply with the U.S. securities law.

Aave is a prominent non-custodial decentralized lending platform, which allows people to provide cryptocurrencies for yield or borrow against collateral through automated protocols on blockchains such as Ethereum with billions in total value locked.

This closure clears a long-term regulatory fog over one of the biggest projects in decentralized finance, at a time when several DeFi entities were on the regulatory radar in the U.S.

The process took a lot of time and resources for the development group to work with for the agency requests.

“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” Kulechov added.

AAVE Price Inches Away From Major Support Breakdown

Over the past three weeks, the AAVE price has showcased a bullish relief rally from $147 to current trading price of $185, registering 26% growth. The upswing aligns with slowdown in broader market correction amid the macroeconomic development in the US market. 

Interestingly, the AAVE price rallied strictly within two parallel walking trendlines, indicating the formation of an inverted flag pattern. Historically, the chart setup has bolstered sellers to recoup exhausted bearish momentum and signal the downtrend continuation after key support breakdown.

With today’s price drop, the coin is inches away from challenging the bottom trendline of this support. The momentum indicator RSI at 42% accentuates the selling sentiment in the market, reinforcing a potential support breakout.

Thus, a bearish breakdown with 4-hours candle closing will strengthen the sellers grip over this asset to drive a prolonged correction to $149 or $111.

Thus, the short-term outlook for AAVE seems bearish but the recent regularity win should bolster its long-term trend and fundamental development accelerates.

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