Let me explain something to you, dyask, because you appear to be conflating the notion of 'fractional mining' with 'fractional banking'.

'Fractional Banking' is when the collective total of a Bank's customer deposits exceed the total cash balance the bank possesses. It essentially means that should there be a 'run' on the Bank, a lot of customers would not be able to withdraw all their funds. While this is serious it is nothing like the concept of 'fractional mining' other than the word 'Fractional' because the customers are not 'investing' their funds (generally speaking) if they are simply holding their money at the bank for security/convenience.

'Fractional Mining' is when an organisation has sold more mining hashrate than it actually is in possession of and utilises manipulative and deceptive practices in order to perpetuate the fraud and keep it running so that more people can be persuaded to 'invest', believing it to be an actual investment product, high-risk or otherwise.

This does not make it simply, 'pretty bad', it makes it an absolute criminal enterprise and the operators of this enterprise are guilty of fraudulent misrepresentation, meaning that every single satoshi of 'profit' they make, all those thousands of bitcoin they have sent to their own wallets over the months, are effectively stolen funds.

Every single 'investor' who bought these fictitious, 'KHS'/'MHS' is entitled to receive their money back in full. That is tens of thousands of bitcoin.

So, no, this is not some 'paltry' couple of hundred bitcoin issue, it is a major fraud.