Crypto exchange Coinbase (COIN) may soon face an enforcement action tied to its listing of potential unregistered securities, the company said Wednesday.

Coinbase disclosed the SEC alleged the U.S.-based company may be operating in violation of securities laws in the running of its exchange and staking services. The regulator targeted Coinbase with a so-called Wells notice that informs the business that the agency is planning a future action that could include an injunction or cease-and-desist without specifying exactly what activity it found in violation.

“If needed, we welcome a legal process to provide the clarity we have been advocating for and to demonstrate that the SEC simply has not been fair or reasonable when it comes to its engagement on digital assets," said Paul Grewal, Coinbase's chief legal officer, in a statement. "Until then, it’s business as usual."

"The company believes these potential enforcement actions would relate to aspects of the company’s spot market, staking service Coinbase Earn, Coinbase Prime and Coinbase Wallet," Coinbase said in a filing with the SEC, citing its conversations with the agency's staff.

The notice is preliminary, and such warnings don't always lead to enforcement actions. The company has until March 29 to let the agency know whether it intends to rebut the SEC enforcement division's findings that securities law have likely been violated.

In a blog post Wednesday, Coinbase further indicated that its digital asset listing process was not the subject of the notice.

Coinbase CEO Brian Armstrong also tweeted about the Wells notice on Wednesday.

An individual familiar with the situation told CoinDesk that the exchange had engaged in over 60 different discussions with the federal regulator over questions about registering and listing digital assets, and the agency had declined to offer any advice or answers to questions. The issues discussed included defining the right market structure and determining which assets could be listed.

Coinbase has publicly criticized the SEC for what it describes as a vague regulatory structure, petitioning the regulator in July to explain how digital assets could fit within securities laws.

For his part, SEC Chair Gary Gensler has said on multiple occasions that he believes crypto exchanges – including Coinbase specifically – are operating as unregistered securities exchanges in the U.S., citing the number of tokens they list and arguing the vast majority of these resemble securities.

Shares of Coinbase were down more than 11% after-hours on Wednesday following the release of the news.

The Wells notice on Wednesday came the same day the SEC sued Tron founder Justin Sun on allegations the TRX and BTT tokens are unregistered securities (among other charges).

UPDATE (March 22, 2023, 21:31 UTC): Adds additional detail.

UPDATE (March 22, 2023, 21:53 UTC): Adds Armstrong tweet and stock price information.

UPDATE (March 22, 2023, 22:20 UTC): Adds information from the SEC.