Unfortunately, TO had been around for quite a while and developed a reputation (justified or not) as an exchange that wasn't out to scam its customers, so I assume a lot of people became comfortable keeping their crypto parked there--and that's obviously a bad idea no matter what the exchange's reputation is.
This is exactly the mistake a lot of people make. I remember telling him something about the dangers of CEX, and he said, "It's finance, nothing will happen to finance". Nothing happened to his coin, but this is the case with many people. As long as the exchange has been operating for a long time and has a reputation, then they can safely keep their coins there. After all, the exchange assures them their coins are perfectly safe.
They feel the exchange is too big to fail. "They have a reputation to uphold". In the world we live in, nothing is too big to fail. People never learn till it's too late.
I even have a friend who only got scared after he read about the bybit hack a few months ago, where they stole a lot of Ethereum from bybit. It was after that incident that he finally agreed to move to a non-custodial wallet. He had half of his life savings in bitcoin, and that really scared him. It was then he realised exchanges are not as safe or secure as they want the public to believe.
I honestly don't know why people will have the choice of having 100% control of their coins but still choose to hand that control over to someone else.