The money for funding operations is supposed to flow through a registered or otherwise legal security instrument, which this ICO was not. The law hasn't changed, just the supposedly innovative ways of pretending the law doesn't exist.
Nope. You can use the ICO like the IPO. You just need to follow the regulation required. Obviously, they opted for an ICO to avoid that.
The money can (and probably should) go to fund operations, however, you're supposed to register such ICOs with the SEC and follow the proper process just as any other release of securities to investors.
I believe this is part of their announcement on how the SEC will be handling ICOs, but IANAL.