Not entirely the case. Pump and dump schemes where seed stage investors sell to unassuming retail buyers in an IPO might be "companies going under", but if the free market rewards the creators of those schemes in premarket valuation etc, that behavior will proliferate instead of decline as society advances without putting them in check.

Pump and dump schemes are fraud and fraud is not legal in a free market.

Look at the flood of SPACs that have declined 90%+ over the past few years after their IPO. Just because something is illegal, like speeding on a highway, doesn't mean it doesn't happen every day.