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?
Corporations leak user data on a massive scale.
Wikipedia's list includes 33 different leaks over the past 15 years, in which data from 100 million or more users was compromised alone. Another 58 records of data loss from 10 to 100 million. The top 5 leaks affected data from half a billion to 3 billion users each. And all these corporations still continue to work, although some of them are marked on the list more than once. You can draw your own conclusions about whether such leaks are a national threat in fact or not. But it is always better to take care of your own information security on your own.
I already mentioned in another topic that,
according to Britannica, in 2021 alone, 42 million Americans (more than 12.5% of the country's population) were victims of identity theft, the total loss was then $52 billion. It is very risky to go through KYC thoughtlessly wherever they ask for it.