Doesn't even have to be malice. I'm sure that most instance admins are great, competent and caring, but setting up a Lemmy instance is trivial, securing it is not.

The default configuration of a proxy could log connections, the config interface may accidentally be exposed unprotected and so on. Again, I'm not saying that most instances are inherently untrustworthy. But, depending on your instance, you are trusting one person or a small team of volunteers to stay on top of everything andyou can't expect them to drain their bank accounts in case of legal issues for you.