Who can blame the companies jumping on the profit train? If you have a drug problem in your city it does little help to blame the drug dealers, you blame the people that are supposed to arrest the drug dealers.
At the same time, for a number of years there was a lot of perceived legitimacy to a lot of crypto exchanges. Sure, there were obvious scams, but some of the bigger players were putting on a convincing "this is actually useful and beneficial to consumers" trenchcoat. I also see the perspective from the SEC of "let's not be too hasty", and to wait to see how it shook out.
In hindsight, sure. Obviously scams and they should have been shut down years ago.
Crypto exchanges were always money transmitters that were required to follow KYC regulations, ICOs were always securities & needed to follow SEC regulations. And so on & on.
Using cryptography doesn't make you magically immune to regulation.
It's like if the DEA announced drug dealing was illegal but refused to provide specific guidance on whether Marijuana, Alcohol, or other substances were considered illegal drugs.