where these sketchy stocks can prosper freely
But see, why would you want sketchy stocks in the first place? This basically devolves into an argument over how to save the Twinkies that were masquerading as real food, made a bunch of people sick, and ended up proving unfeasible for everyone involved.
I like your metaphor so Ill try to explain my reasoning with it. I think that there should be 2 options for people, buy fresh twinkies from a grocery store (that is regulated by FDA) and you can also buy old gross twinkies you found in a back alley if you want to take the risk of it being expired/poisoned. My point is that for centralized exchanges to operate they need to be complying with the regulations in their field. We cant have half-assed grocery stores profiting off the old twinkies that should never have been sold in the first place.