kyc is still a big problem in the crypto world, which interferes with our personal documents. If we do kyc in scam project then there remains the possibility of our personal documents being sold in black market. so we should careful to do kyc on any crypto website
For players perspective, it can be a big problem but still it depends on our own preferences.
If you are worrying about document illegal sales, it may happen in any website/online service (not only crypto)
I was at the same thought as you few years back, but I'm fine now with KYC as long as I trust the website.
If you are so worrying about document sales, do not even use any online service including once your government ask you to submit document in their website.