The Securities and Exchange Commission issued an investigative report on Tuesday concluding that tokens offered and sold by a "virtual" organization known as "The DAO" were securities and, therefore, subject to the federal securities laws. The regulator is cautioning investors that offers and sales of "initial coin offerings" or "token sales" by "virtual" organizations using distributed ledger or blockchain technology are subject to the requirements of the federal securities laws. Issuers of distributed ledger or blockchain technology-based securities must register offers and sales of such securities unless a valid exemption applies. Participating in unregistered offerings may subject participants to civil or criminal enforcement proceedings. Securities exchanges trading in these securities must also register unless they are exempt. "The DAO" has been described as a "crowdfunding contract" but it would not have met the requirements of the Regulation Crowdfunding exemption because, among other things, it was not a broker-dealer or a funding portal registered with the SEC and the Financial Industry Regulatory Authority. However, the SEC decided not to bring charges in this instance, or make findings of violations in the Report, but use the results of the investigation to caution the industry and market participants.