They took on five or ten times as many customers as they could handle. And that's a thoroughly unsound, irresponsible way to do business.
They took on every customer they could when there was the demand, and then tried to figure it out... something pretty much every startup out there would do as well if given the opportunity.
Along the lines of "Better to beg forgiveness than ask permission."
If you want regulated and safer, stick with coinbase and gemini, which also means sticking with bitcoin, ethereum and litecoin. And even then, customer service is pretty thin.