To be fair, FTX isn't a result of crypto being unregulated. Operating an exchange is regulated to some extent, but this is a story of failed corporate governance amongst many other things.
Any sane regulator would not allow the shit happening that happened in FTX.
This is not a company making bad business decisions. This is company making bad criminal decisions with the money they did not own and were not free to do what they pleased and creating impression of value in a fraudulent way.
What's criminal here is that it wasn't just failed governance, there was literally no governance. They comingled funds (it's just a big pile of cash, right?) and didn't even consider risk. [1] This is what happens when Scooby and The Gang run a hedge fund. Zoiks!
The point of regulation is that it ensures that companies have frameworks like this in place, and that the actors are playing fairly. Mainly because we can't trust some people among us to not take advantage of having access to other peoples money. You can't build a civilization on the back of "Trust me bro I'm good for it".
Think about it, why do people regularly hand over their money to their bank, when they've never met the people actually running it? We trust that if we put money in, that later it will come back out. But why? It's because regulation solves the trust problem, if your bank is FDIC insured you're covered. Thanks government!
Yes regulation is an evil, but a necessary evil. It's a tax on everyone because some people can't be trusted with the keys to the bank vault. The government ties their hands, that's a good thing. It's harder to raid the cookie jar with one hand tied behind your back.
[1] https://www.yahoo.com/video/sam-bankman-fried-said-hed-13173...
The issue I have with this space is that lack of central/governmental control is the original selling point. Lack of regulation is a defining feature, not a bug. This is a huge red flag for me. If I was a con-artist, I'd be drawn to this space like a moth to a flame. I don't trust any of the players in this space, anyone legit would be making real $$$ in TradFi. It's the modern day junk bond.
This picture summarizes the situation perfectly. Caveat emptor indeed. [1]
Not as exchanges, not as brokerages, or anything else resembling their supposed business model.
They’re registered business but that’s about it.