You don't have to use centralized exchanges though. Coinbase and many other exchanges violate the decentralization principles of Satoshi Nakamoto.

If all transactions go through 1 address on a LN node, then how do you differentiate identities using the same address? If the address that it eventually ends up on is on another hardware wallet, how are they passing along KYC info? I just don't see that anywhere in the code.

LN says that nodes can only see jumps from the previous node to the next node and don't know if it is the origin or destination unless they send or open and realize they are the recipient.