If you trade on a centralized exchange, then you must confirm your KYC data. KYC data is needed by the centralized exchange to find out and verify user data. And we know that KYC can be misused by irresponsible individuals. That's what KYC lacks.
And that is why people are actually scared of putting their personal information on the internet or in the hand of these centralized exchanges. There are a lot of options out there that don't require KYCs, why do it in a centralized exchange when you can do it in a decentralized exchange? It is not the lacking of KYC, it is the downside of using one.