The U.S. Securities and Exchange Commission's enforcement staff told crypto exchange Bittrex in March that it will recommend the agency take legal action over alleged violations of investor-protection laws by the company, the Wall Street Journal reported Sunday.

The SEC's Wells Notice likely preceded Bittrex's announcement at the end of March that it will be winding down its operations in the U.S., in part because of challenging regulatory conditions. The company is uncertain if the SEC will take legal action since it is now exiting the market, according to the Wall Street Journal's report.

If the SEC does sue, Bittrex would litigate unless the SEC “came with a reasonable settlement offer,” David Maria, the firm’s general counsel, told the newspaper.

SEC enforcement action against a several prominent crypto enterprises have sent ripples through the industry. In February, exchange platform Kraken announced it was shuttering its staking program in the U.S. and paying $30 million to settle SEC charges.

In October, Bittrex paid the U.S. Treasury Department's sanctions and money-laundering watchdogs $30 million over allegations that the company had a poor compliance program between 2014 and 2017.

Bittrex and the SEC didn't immediately return requests for comment.

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Sandali Handagama

Sandali Handagama is CoinDesk's deputy managing editor for policy and regulations, EMEA. She is an alumna of Columbia University's graduate school of journalism and has contributed to a variety of publications including The Guardian, Bloomberg, The Nation and Popular Science. Sandali doesn't own any crypto and she tweets as @iamsandali