Comingling customer funds with their own personal and corporate funds to use for their own gain
Note: Even when nothing bad actually happened, this exposes customer funds to risk. It's fraudulent for me to promise to store your car in a garage, but then take it on a 140 mph joyride down the freeway.
Even if they didn't literally use customer funds to buy yachts and mansions, I have heard about pledging customer funds as collateral or using them for an acquisition which is then paid back using funds and revenue of the acquired company. It's sketchy shit that is not allowed in the regulated world that crypto companies have played loose with. Very dangerous.