That is called fractional reserve exchanges. On these exchanges it is assumed that most people will not cash out at the same time and continue trading instead. Using this method exchanges can artificially expand their trading volume by printing fake coins and also profits by collecting additional fees. The main problem here is that such exchanges are insolvent by default, if demand for real coins increases, it leads to collapse and bankruptcy of the exchange. In other words, if any exchange is run on fractional reserve system, it is insolvent therefore a scam exchange. Users should always remember the motto "Not your keys, not your coins." to avoid being scammed by these fractional reserve exchanges.