What happened

Coinbase Global (COIN 12.14%), the frequently volatile stock backing the namesake cryptocurrency exchange platform, didn't have a good Wednesday on the market. The company's shares slid by more than 8% across the day due in no small part to the actions of a market enforcer.

So what

In a regulatory filing, Coinbase disclosed that the Securities and Exchange Commission (SEC) has served it a Wells Notice. This is a formal notification from the SEC that the recipient may be in violation of securities law and risks facing enforcement from the regulator. A Wells Notice is often one of the last steps prior to the SEC filing formal charges for wrongdoing.

In the filing, Coinbase said that it believed the notice is related to facets of its business related to spot markets, and its services Coinbase Earn, Prime, and Wallet. 

The company addressed the SEC's notification on its official blog in a post from Chief Legal Officer Paul Grewal. CEO Brian Armstrong also responded to it in a series of tweets.

In the blog post, Grewal wrote that "Although we don't take this development lightly, we are very confident in the way we run our business –- the same business we presented to the SEC in order for us to become a public company in 2021." He went on to detail aspects of what he characterized as the authorities' "regulatory confusion" around the cryptocurrency industry.

Now what

In his 15-post tweet thread on the matter, Armstrong sounded the same notes: "After years of asking for reasonable crypto rules, we're disappointed that the SEC is considering courts over constructive dialogue," he wrote. "But if courts are required, so be it. We'll defend the rule of law."