Exchanges are required by law to know their customers also known as kyc they have to know your ID and name and address technically from a legal standpoint in order to operate legally, but there are still some exchanges which do not require this for some reason.
From the exchange's perspective it was a wise decision for both legal precautions and protecting their other customers. Firms like CipherTrace are set in place to help with money laundering and combat terrorist financing. People worry they are tracking every detail but it's really more large amounts of money