Ok, passwords are one thing. Your IP adress is another.
And if "they" want, they do know your IP-adress (your provider
will give it to them), and with that they know everything you do, on the internet - and not only that. Forums, passwords, money transactions, social contacts, friendships, dislikes, Facebook etc. - all those info scraping already provides "them" with a good profile of you.
This password thingie is imho just a distraction.
Greetings,
Catfish