That's quite different, and virtually no one lost their money in that it was simply stolen by the owners of an accredited brokerage/exchange/bank, like what happened to FTX. And FTX wasn't simply gambling with other's money, they were defrauding their customers (to whom they claimed they are holding all of their money in custody) and also directly embezzling this money for their own gain (houses, publicity, illegal political investments).

And yet, there are many times over more people using exchanges than holding their own wallets. I don't really care about crypto-in-principle, when crypto-in-practice is anything but safe.

The average person has no idea what you’re talking about when you say you have to hold your own keys, and would be absolutely screwed if/when they lost them.

Getting locked out of your own crypto wallet is a much more significant threat than government seizure for 99% of the global population.