This happened to me with twitter. made an account, followed some people, they locked the account and told me it exhibited bot like behaviour and I needed to scan some photo id to send to them for them to unlock it.
Never worried about twitter ever again. Probably the healthier choice in the long run.
With most of these, the service itself doesn’t demand your ID; they demand that you give your ID to some third-party KYC/AML provider, who then just sends a “yes, this account isn’t fraudulent” signal back to the service. It’s like really overwrought SSO.
And if that third party is the same that actually issues your ID (I.e. the government), you give no one anything they didn't have already. It could even be constructed cryptographically so that
1. the government doesn't know for what purpose it verified your identity, only that it did
2. The party receiving the proof of ID (or proof of age, or proof of non-duplicate registration - it could potentially be a lot more limited than full ID) gets it in a zero-knowledge form, so they can't turn around and give it to someone else.
That's only really comparable if you're exchanging a few hundred dollars worth of crypto. What if you need to exchange several thousand? The spreads are going to be terrible, as would be counter-party risk. Timing would also be an issue, which is important if you're trying to trade (as opposed to HODLing).
The fees and inconvenience are only an issue for regular traders that are repeatedly buying and selling. For 6+ figure amounts it is even better to use 'over the counter' peer-to-peer services. Companies that are buying hundreds of millions worth are not using exchanges. I found it easy to do 5 figure trades even in 2014. There are significant fees and inconveniences when moving fiat to centralised exchanges so it evens out.
Never worried about twitter ever again. Probably the healthier choice in the long run.