Gary Gensler, the Chairman of the United States Security and Exchange Commission, has built up a reputation of being anti-crypto throughout his tenure as the SEC boss. However, while most of the crypto community has been quiet regarding Gensler’s crypto stance, two US reps seem to have had enough and issued an ultimatum to the SEC chair.

In a September 17 letter to Gary Gensler, US Representative Tom Emmer and House Financial Services Committee Chairman Patrick McHenry expressed their concerns over the SEC's assertions about airdrops over the last two years. 

In September 2022, the SEC sued Hydrogen Technology Corporation and its former CEO, accusing them of manipulating the “crypto-asset securities” market.

Hydrogen Technology Corporation had minted over 11 billion Hydro tokens in a fundraising effort and distributed them as airdrops. However, in its case against the firm, the SEC called these airdrops “unregistered offers and sales of their securities.”

In another case involving Justin Sun and some other firms, the SEC, in March 2023, accused these firms of offering and selling BitTorrent (BTT) in “unregistered monthly airdrops to investors.”

In their letter to the SEC, Representatives Emmer and McHenry referred to these cases as proof of the SEC’s antagonistic approach to airdrops. They also expressed their fear of the SEC preventing the tech from achieving decentralization to its full potential through what they referred to as:

... misapplication of the securities of the securities laws.

The two reps have now given Gary Gensler an ultimatum of September 30 to answer five questions related to crypto airdrops. One of those questions includes “how crypto given away for free” can be placed under the Howey test, and another one is how exactly the SEC distinguishes airdrops from other reward schemes like credit card points.

Gary Gensler is also supposed to explain how classifying airdropped tokens as securities would impact on-chain apps, economic growth, and tax revenue and whether the SEC had assessed the market impact of classifying cryptos as securities.

Both Reps publicly criticized the SEC, saying that prohibiting Americans from participating in airdrops prevents American crypto users from fully realizing the benefits of blockchain tech. 

However, while Emmer and McHenry’s dissatisfaction with the SEC is the most recent, it is not the only one. This is the second time in a week that Republican reps have called out Gensler over crypto. 

On September 10, several Republican lawmakers also questioned Gensler, a Democrat himself, on the crypto issue. They asked whether Gensler’s political affiliation may influence who he hires at the SEC. They accused the SEC of hiring individuals from left-leaning organizations and placing them in senior roles at the agency.

The SEC has not responded to any of the recent questions. Still, if the previous hiring allegations are true, the SEC would be violating the Civil Service Reform Act, which may put Gensler in serious hot water.

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