So, if you're a US citizen, can you swap crypto directly with someone from another country without dealing with KYC? If that's not allowed, what KYC details do you actually need to gather from them?
For example, Bob is a US citizen sitting on $100k of some illiquid altcoin and wants to sell it. Meanwhile, Alice, who isn't from the US, wants to buy it for $100k worth of Bitcoin. Then you have Alex, another US citizen, acting as the escrow.
I don't see why it shouldn't be allowed.
When you make a profit you need to pay capital gain taxes, no matter if the profit is in USD, GBP, EURO, or another cryptocurrency. Bitcoin is considered property in The US, and people can exchange property for another property if they want.
But since you're talking about high volume, the story may be a bit different and you may need the money transmitting business registration.
See this story for just $56,000 on LocalBitcoins (Michigan Man Charged for Unlawful Bitcoin Exchange) It's back in 2017 but still.
As for the KYC, the minimum is asking the name/last name and proof of residence
Most of these sound like people running a business (i.e. continuously buying and selling with markup), and that's where all the AML and other requirements come in. That also seems to have been the case here assuming no one's lying: https://www.morrisoncohen.com/siteFiles/files/2017_10_25%20-%20U_S_%20v_%20Stetkiw.pdf
He had the charges dropped: https://www.courtlistener.com/docket/6182321/15/united-states-v-stetkiw/
But the alphabay part and apparently also CP found on his computer could have complicated things. Don't have a Pacer account so can't access further details.