Scams and rampant speculation create noise. Noise creates information assymetry in the favor of the lazy schemers. Lemon market conditions arise, and the consumer cannot tell good product from bad. Left unchecked, productivity decreases in favor of creating more easy money schemes and less actual goods. Regulated markets begin looking more attractive, because real things are getting done there.
Discussion
free markets will have scams, unavoidable, still better than regulated controlled markets
They might be better until the regulated markets' look more efficient. Look at stock exchanges in developing nations. They are arguably freer, but much more subject to fraud and risk. The world prefers predictable, stable regulated stock exchanges
Are we better off having heavier regulations around pink sheet stocks? Or should Jordan Belfort still be running Straton Oakmont?
"Left unchecked" major tyrant red flag.