The biggest difference between Crypto and the traditional financial world is that private keys control assets, rather than your KYC or bank account. This means that the private key is not bound to your identity, and there are no legal constraints. When your coins are deposited into the exchange, you have already handed over the private key, which is equivalent to handing over the asset. Relying on industry self-discipline and imperfect compliance, the market trusts large exchanges because their cost of wrongdoing is high, not because CEX cannot commit wrongdoing.