This is not just limited to exchangers anymore but also to the new alt projects with high throughput.
If you are a criminal looking to launder some money, then this must surely be an attractive way to do it. Copy the code from some existing shitcoin. Launch a bounty campaign across here, Reddit, Twitter, Facebook, YouTube, etc., paying in your newly made up shitcoin. Require everyone to first complete KYC to receive payment in your newly made up shitcoin. End result: Hundreds of people submitting their full identities and KYC documents directly to you, and you didn't have to spend a single cent or sat.
Anyone who sends their KYC documents to an altcoin is just asking to have their identity stolen.
Might be that harmful but in order to be able to benefit out on services that could bring some convenience and accessibility then you would really be needing to sacrifice your identity
Let's be honest here - it isn't convenience or accessibility which drives people to sacrifice their privacy; it's greed. They want to get a piece of the obviously unsustainable 20% APY that such centralized platforms were promising before they went bust. They want to get in on the next pump and dump scam. They want to be airdropped the next shitcoin scam. They want to get their 10 shittokens reward for completing advanced verification. And so on.