The US Government didn't provide high-volume, bulk access to this extremely sensitive information to contractors in foreign countries with no controls over their ability to mass-exfiltrate the data.

Coinbase is the entity that set up this dangerous system.

Coinbase did it because it was cheap for them, not because they were being trustworthy custodians of information that put their customers at risk.

Sure, yes, obviously every company's employees and contractors are vulnerable to bribes and blackmail. That's why a trustworthy, competent custodian would establish systems and controls to prevent bribed and blackmailed insiders from mass-exfiltrating information that could get their customers killed.

The fact that other companies manage to be trustworthy, competent custodians while Coinbase doesn't is not the fault of KYC.

Fair enough, and it does sound like they had limits given that not all customer data was exfiltrated but those limits were probably far too high at tens of thousands affected.

Outsourcing also led to the Ledger leak of customer data. You'd think Coinbase would have learned a lesson from that.

You don't think Coinbase is responsible for restricting access to member data for support agents?

There is no valid reason why Coinbase or any other financial services company should ever be excepted from AML/KYC laws. If anything the laws ought to be even tighter to slow down financial flows to criminals and sanctioned entities.

Generally, staff do not have unfettered access to all customer data in most financial companies.