"Is crypto still fair?"

Ummmm, since when was crypto "fair"?
Also, since when was any kind of market "fair"?

Startups have the right to accept or reject whoever they want.
It can be argued that allowing anyone to participate can build trust in the company, but seriously, that's not the case.
It's not that way because when you strip it down, it's a we're in it for the money scenario, on both sides..

With that being said, it honestly just seems to be a technical problem.
Most startups have only 10 to 20 employees.  Going through thousands of KYC applications is likely to cause errors.
Although it does suck, it seems inevitable that there would be problems that pop up.

Best thing is to move on to another one.  There are so many legitimately good startups and ico lately that you are bound to find another one.