> FTX faced no such regulation and if you sent them crypto you no longer owned it. FTX did.

This is at best only partially true, you own a claim on the underlying asset.

This is not a matter of regulation, it's a matter of your contractual agreement with FTX.

I don't know how more regulated brokers work, but I also doubt you own the asset outright, you also probably own a claim, which is why if the broker goes bankrupt because of fraud you might not recover it.

Regulation wouldn't have changed anything here: as FTX simply broke the law, which they could have done regardless of regulation & reporting requirements (e.g. WorldCom, Enron, ...).

What they did was not legal, even wrt to what regulation they were subjected to.