Aave price to tank 20% if largest crypto exchange Binance is found in breach of US financial rules

Aave (AAVE) price is building on a nice recovery for the month of May with an attempt to pare back some of the incurred losses for May. Those losses at one point were at -15% but are now rather near a slim -5% for this month. Unfortunately, it does not look like bulls will be able to turn it into positive numbers as a big tail risk is emerging suddenly that could create another shockwave. A Reuters report reveals that Binance exchange is in serious breach of US financial regulatory rules and could become barred from operating in the US if it loses its license.

Aave price to head below $60 if Binance US shuts down

Aave price saw bulls setting the record straight for the month of May after a rough first couple of days. Bulls have thus far pared back nearly 10% of the 15% negative performance for the month. Just as that remaining 5% is nearby, a sudden shocker has slammed into the crypto market as a whole after theReuters report came out. The article states that Binance mingled its customer funds with its corporate funds during 2020 and 2021, a major regulatory no-no. 

AAVE could see a nosedive move if the FBI or the SEC, or any other regulatory body of the US justice department for that matter, decide to open a formal investigation. Certainly, if Binance exchange loses its US license and freezes billions of US assets, it would mean a big blow to the entire crypto industry. Aave and all other altcoins would go in search of support with Aave price breaking first the green ascending trendline and next heading a firm 20% lower toward $56 where a longer-term support line can be found.

AVEE/USD  4H-chart    

In the past Binance exchange has always cooperated constructively with regulators. The best example of its support for the sector came during the FTX fallout. A penalty or fee could be a solution and provide Binance Exchange more room to operate in the US. That would mean a risk is avoided, and Aave price could then break above $67.65 and start heading toward $72.