this post was submitted on 05 Jan 2022
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I thought so too until I looked into it in more detail. After withdrawing from an exchange (if an exchange is used), one can use trust-less mixing to deposit fractional amounts into many different accounts generated from the same seed. I don't know if any crypto has a fully functional trust-less mixing protocol already implemented, but it is a work in progress for at least the project that I follow. The algorithm has already been described and I expect that in the future it will be accessible to anyone.
For a regular person using crypto in their day-to-day transactions, shuffling the coins can work well enough.
Exchanges already block shuffled coins so that doesn't work
Couple examples [1] [2] [3] [4]
Thank you for pointing out those examples, they provide some valuable insight.
The government is not going to want you to have privacy, and they will continuously push for KYC laws. The exchanges will choose to abide by regulations because of self-preservation. In those messages that you posted, the exchanges cite "risks" without specifying - the risk that they worry about is regulatory risk. They don't want to be punished.
Once you have the crypto under your possession, you own it and you have control over it. You can take steps to make this private. Crypto deposited in an exchange is not under your possession.
These are not problems that show that crypto does not work. Quite the opposite. These are problems that showcase why we need to crypto! Adoption and development could allow us to not need centralized exchanges anymore.