Every regulation comes from some past scam. Clearly there must have been enough "oopsies" in the past attributed to commingled assets that regulators said "no more".

Yes. Because they're gambling with the customers' money.

That seldom ends well.

Comingling doesn't imply gambling.

I could borrow $10 from Jim, and $20 from Sue, and deposit them both into the same Chase account which now has $30. As long as the balance stays above $30, everything is fine.

You could let the balance fall below $30 in your example because it’s a loan (“borrow”), not a deposit.

If you’re claiming to hold the funds on their behalf and do otherwise (like “investing” them in your less than arm’s length hedge fund), then you’re breaking your fiduciary obligations.

Right, the problem is when leverage and borrowing comes in

If customers are aware of it, maybe not. But if they're representing to customers that these are their funds, expressly or implicitly claiming that they're held separately, then that would be inherently problematic - it means those customers are a lot worse off if Kraken goes bankrupt, because if Kraken has been paying operational expenses out of those accounts then their suppliers etc. can go after those accounts. (And no, the regulators won't treat it as a "no harm no foul" just because Kraken didn't in fact go bankrupt - they were exposing their customers to risk even if that risk didn't come to pass)