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I would turn your Kindle on once to register it. This activates Collections and some other cool features. After that, turn it off the WIFi and never reactivate it. That way no data is sent back to Amazon.
You will have to sideload all of your books. You will need to learn what sites sell DRM Free Mobi books so you can read them on your Kindle. You may want to learn how to remove DRM so that you can buy e-books from stores with DRM (like Amazon) and then side load them to your Kindle.
Overall, life is easier if you are willing to use the WiFi and buy books from Amazon. It is amazingly convienent being able to download books from Amazon or your Archive in a matter of seconds. Yes, Amazon will have a record of your purchases, just like any store that you buy from these days.
I have yet to hear of anyone being arrested because they had inappropriate material on their Kindle (or any e-reader) or because they had downloaded a bunch of strange books that caused the government of any country to go nuts.
Do what you are comfortable doing but I would say use the WiFi and enjoy your device to its fullest.
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