Centralized exchanges share your data globally.
The explanation in this video is somewhat simplified. Although not all exchanges sell or share data irresponsibly, their practices could change over time, potentially undermining user trust. Nevertheless, centralized exchanges are subject to regulation by one or more jurisdictions and might be required to disclose data to regulators or law enforcement. For tax purposes, this could include automated data sharing with CRS member countries.
Additionally, an exchange might outsource KYC/AML/CTF transaction risk scoring to third-party companies. In many cases, it is illegal to delete certain data, resulting in the creation of large data silos that hackers consider attractive targets.
The level of detail an exchange possesses regarding its clients and transactions cannot be fully known. However, the larger picture will exist somewhere — whether through outsourcing, automation or government requests.
For these reasons, many individuals are turning to Decentralized Exchanges (DEXs) such Bison Wallet and Thorchain. Keep in mind that receiving crypto as payment for services rendered is often the easiest and most direct way to acquire it.
There are many privacy coins but, in my opinion, Beam and Monero are among the best.
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