SEC Closes Four-Year Aave Probe; AAVE Faces Short-Term Downside
The U.S. Securities and Exchange Commission has closed its four-year investigation into Aave Protocol without recommending enforcement action, Aave founder Stani Kulechov confirmed on December 16, 2025. The probe, opened in 2021, examined AAVE’s governance token, liquidity mechanisms and platform operations under U.S. securities law. The closure removes a major regulatory overhang for Aave and the DeFi lender sector, improving the long-term development outlook and reducing fundamental regulatory risk.
Technically, AAVE shows mixed-to-bearish short-term signals. After a three-week relief rally from about $147 to $185 (~+26%), price pulled back ~2.8% during U.S. trading and is trading inside an inverted-flag pattern. A bearish 4‑hour EMA crossover (50/200) and an RSI near 42 indicate selling pressure; a decisive break below the pattern’s lower trendline could target $149 and then $111. Traders should note that regulatory clearance is a positive fundamental catalyst for longer-term positioning, but near-term momentum and chart structure warn of potential downside. Monitor support near $149 and momentum indicators (EMA cross, RSI) for confirmation before adding exposure.
Primary keywords: Aave, AAVE price, SEC investigation, DeFi regulation. Secondary/semantic keywords: inverted flag, EMA crossover, RSI, support breakdown, price targets.
Bearish
The SEC’s formal closure of its four-year probe is a significant fundamental positive: it removes regulatory overhang and lowers long-term policy risk for Aave and DeFi. That should support medium-to-long-term confidence and development. However, the immediate market reaction and technical setup point to near-term downside risk. Price rallied ~26% into the news but has pulled back and is trading within an inverted-flag pattern. Short-term indicators — a potential 4‑hour 50/200 EMA bearish crossover and an RSI around 42 — signal selling pressure. A break below the flag’s lower trendline would likely accelerate declines toward identified supports at ~$149 and then ~$111. For traders, the appropriate approach is to treat the news as bullish for fundamentals and project survivability, but tactically expect possible short-term profit-taking and validation of bearish momentum before initiating new long positions. Monitor the $149 support, EMA cross confirmation, and RSI for trade signals; stops should account for volatility around these levels.