Do you know what are you talking about? Banks don't have all the funds. Are they Ponzi scheme? No.
What the failing crypto exchanges are doing is similar to you buying stock in Apple, but they figure that Wal-Mart will give a better return, so they buy that instead, and when you go to sell your Apple, they hope to pocket the difference. With the fintech variety of financial engineering on top of this.
[1]: https://en.wikipedia.org/wiki/Deposit_insurance
[2]: https://en.wikipedia.org/wiki/Federal_Deposit_Insurance_Corp...
Those two entities have two different functions in any financial system.
You should not be using your exchange like a bank. Even more importantly, your exchange should not be using your assets as a bank would.
This is the most important sentence to say over and over again in this entire discussion. Crypto people have somehow forgot this idea or maybe most of them never realized it in the first place. Your wallet is where your coins should be stored - the exchange is a place where you have pointers to your N wallets for N coins - not the freaking contents of the wallets themselves!
Crypto exchanges, on the other hand, mostly operate as broker-dealers, who happen to be engaging in off-exchange transactions (which are mostly illegal, or heavily regulated at least, in traditional assets). Furthermore, some, such as FTX, have taken it upon themselves to act as banks on top of this all. It's true that you can borrow money from a traditional broker-dealer, however, behind the scenes, regulations T, U, and X govern the process by which the BD pledges securities held in your account as collateral (which you allow them to do when you sign a margin agreement), in exchange for money from the bank, who in turn is governed by a heck of a lot of regulations and in turn is backed by the Federal Reserve and FDIC.
Basically, they're trying to be the entire financial system spun up in a few lines of html, javascript, and whatever flavor of the day scripting language they happen to be using is. Big surprise -- it's not working very well.
At the end of the day, the ones doing a better job are the ones that at least are leaving the banking side of things out of it, and charging a higher spread on executed trades, so that they can avoid needing to monetize simply holding your assets. This isn't a surprise -- if someone's charging you less than 1% on your trades, you should be VERY supicious.