The point is that people who were the most impacted of the fall of FTX and all those others exchanges are actually people in developing countries that lost ALL their savings. It was perhaps a few thousands dollar for people in the western world, an alternative way to do some investing, but lots of people in countries with bad financial systems (lets say Argentina or Venezuela) tried to use crypto as their stable banking system and it failed them miserably and now lost almost everything.

So while in theory crypto offers that alternative that should be better than those shitty countries economic policies, in practice, this gave them something worse than their local bank.

Yes Yes, you can use a hardware wallet and would have avoided all of that, the reality is that a very high percentage of people were just using the tools offered to them and didn't think it was all a giant fraud.

"Western finance" is heavily regulated (well, consumer banking anyway) and for the most part is pretty secure. Crypto is completely unregulated and chalk full of bad actors distracting you with grandiose promises while fleecing you behind your back. Every other month there's a report of some massive theft/data breach at an exchange.