If you used dozens of stocks as collateral to finance the borrowing of money to purchase other assets, which you then use as collateral to buy more assets, it would be considered a scam -- but not in a hedge fund. This can lead to large swings in volatility and hedge funds should only be used as part of a portfolio investment strategy -- a professional investor will use them to cancel out risk in other areas of their portfolio.

The risk is that a non-professional investor uses these instruments as primary investment vehicles without understanding their purpose. Because many hedge funds do operate very similar to the ways that illegal stock scams run: the difference is that the investors know exactly how and why these funds can implode and are willing to take that risk.

EDIT: That said, the specific qualifications for a "professional investor" definitely need some work.

Somebody suggested allowing Financial Analysts that have been, in some capacity, verified by FINRA/SEC for their understandings of markets. I would be on board for this.

Uber and Lyft are a different case, but here the regulations (as pointed out elsewhere) don't prevent you from investing your money per se; they just require you (well, the company) to register the securities with the SEC and fill out some paperwork detailing the investment.

The reason they do this is specifically so that they can prosecute any illegal actions down the line; it's basically impossible for them to enforce the existing laws without also requiring the filings and registration, because otherwise they don't know the terms of what was offered in the sale (and who offered it, so they can be identified later).

I'm oversimplifying somewhat, but the point is that this isn't "another law to 'protect'" you - it's required to make the exact prosecutions you're referring to.