I always wonder why centralized exchanges are still a big thing after everything that has happened already, since sudden collapses of big crypto platforms have been happening since few years ago, MT GOX was a good example.
The problem is not with the exchanges, it is the government and why the exchanges are involved is because the government can only successfully enforce their laws through the exchanges. The exchanges must comply with the rules of the government. Meanwhile, we need to understand that exchanges (CEX or DEX) are very big part of the cryptocurrency industry, the industry cannot do without the exchanges. If you check the number of newbies that come to this industry, majority of them came through the exchanges and instead of them to own non custodial wallet and save their keys, they will open account on exchanges.
The government cannot sensor all the bitcoin. There are still highly private people like the Op and some of us who doesn't dwell much on exchanges and KYC.
That's the tricky part. Once you've lost it, it's often not an easy thing to obtain again.
Privacy lost cannot be regained, but one can choose to prioritize it after a period of not doing so and still achieve some levels of anonymity.
Yea, if you do not validate your data on exchanges, to a certain time the data would become invalid. Which is better than revalidating the data with the fear that your privacy is already gone.