I have heard many horror stories regarding identity theft. I cannot even imagine having to find out one day that someone took out loans on my name worth a fortune. How would someone fight back against that? The only thought that comes to mind is to report the stolen KYC data to authorities as soon as possible, but you might not even know it was stolen in the first place... That's dangerous.
These things don't happen anymore, and if they do usually the loan giver is at fault. If you can take out a loan just using somebody's data, then you have a very large treasure trove of potential loans sitting on the dark web. There is data of millions of people there are it is usually sold cheaply, because it is difficult to use but easy to acquire.
It makes no sense to me to be selling your own KYC to other people, really.
The usual way criminals use this is when they steal the IDs, but if people do it with their own KYC, that's just crazy in my mind.
It is not even in the list of top 10 stupid things that people do to earn money, so it is not that crazy.