I sometimes think about this and can't understand, why do governments push exchanges or any other services to gain KYC documents of their customers. Isn't it a national threat for governments that random exchanges collect KYC documents of their citizens? Especially when there are so many KYC data leak accidents.
An attacker with your details can ruin your life, commit fraud in your name, take out loans and credit in your name, but the government don't give a shit about any of that. That's not a national security threat, just a personal threat, and your government does not care about you. Plus the government can then tell that exchange to hand over all your financial activity which they can definitively link to your real identity. No government in the world would pass up on this kind of freely given mass surveillance.
Imagine that 60% of Ireland's population (The current population of Ireland is 5 million people) is registered and KYC verified on Coinbase and one day there is a data breach, boom, KYC documents of 60% of Irish people is publicly available. Isn't that a national security threat?
It's also a national threat for the USA that its citizens are uploading their KYC data on Binance?
Btw it's very interesting to know if anyone here become a victim of a data leak (taken loan, etc) and hired a good lawyer and won the case. I can't find similar accidents. It's really very interesting because 1 part (government) pushes you to submit KYC to 2nd part (exchange for example) and this 2nd part leaks your data and you experience financial loss. Logically, you are a victim of these two and it's interesting to know how does the judge looks at this case.