Short answers, pulled from the story.
A security token offering is a public offering of digital securities that function like traditional stocks or bonds but live on a blockchain ledger instead of paper certificates. Companies sell these digital assets to investors through specialized exchanges such as Binance, Kraken, and Binaryx.
The main difference between an initial coin offering and a security token offering lies in their legal classification where ICO tokens are often classified as utilities while security tokens represent actual securities tied to a real company. The debate centers on whether a passive financial return was expected from the investment which determined if it qualified as a security under legislation.
Regulation varies significantly across different countries with the European Union using MiFID II, Germany issuing licenses through BaFin, and the United Kingdom categorizing them under Specified Investments via the FCA. Switzerland places them under FINMA regulation while the United States enforces strict rules where security tokens fall under SEC jurisdiction alongside standard securities.
By the end of 2019 these digital instruments appeared in multiple scenarios across global markets including Nasdaq-listed company stocks traded using this new technology. World Chess launched its pre-IPO through an offering on FIDE's official broadcasting platform and the Singapore Exchange created its own market for these tokens backed by Japan's Tokai Tokyo Financial Holdings.
High-profile prosecutions emerged when companies mislabeled securities as utilities to avoid regulation such as the SEC suing messaging app Kik for over $100 million after determining their token was actually a security. Legislation understood that even if a company claimed their tokens were merely utility assets they could still face prosecution if returns were proven possible.