To me it sounds like an exchange that answers to no one decided to just steal 30%+ of it's customers deposits and replace it with a made up garbage coin and an iou. Likely no hack ever occurred for real.
Nice, no regulation you say, now you pay for it! Bitcoin has it's flaws, huge one's and this a perfect example. You either want regulation or you don't but you cannot have your way and feel the gov. or authorities owe you something as well.
by the way regulations are not about protecting customers funds from the exchange..
its about protecting the exchange from criminal customers..
there is, separate from regulations.. the consumer protection part. which is about insuring funds.. which.. bfx faked.. bitgo were not insuring bfx's losses.
even without regulations. consumer protection is still a thing. and a separate crime if the exchange exploits this.
in short you dont need regulation to protect users. just consumer protection.. which is still not perfect when a scammer defrauds users by faking their insurance and reserves.