I would love to look at the books and the investor decks etc. It feels to my uneducated self that if you have a crypto exchange with no users you don't have a viable product. And if you have one with loads of users you are printing money and don't need investors. But apparently FTX managed to convince people it was both huge and loss-making AND that that was a good opportunity to "invest"...
Did they get the decimal wrong?
This is just investor fraud. Customers funds are a separate issue not regulated by the SEC.