Yes, exchanges shouldn't commingle their assets with clients funds, yet they have large operational outlays (coding &security, traditional financial fees, meth & luxury condos in Bahamas, etc.) that seem unlikely to be coverable with trading fees alone. Even if we allow them to work like banks, they still can't seem to justify the tens of billion valuations.

(*stealing their customers’ money, but I can’t edit it without making it seem like you’re replying to something else entirely)

Okay, but that’s only half of what OP said. They’re also trading on customer assets. That is an extremely bad thing no matter how you look at it.