I posted about nearly a week ago. Yes the auditors made it clear they wanted KYC before releasing any funds whenever they might be able to recover them and be in a position to return some of them to users that lost their funds.
They also require KYC before they release any funds (if any) so that means my few bits and bobs on that exchange from a long time ago will never be returned to me as I will never send KYC to that outfit.
It seems they are asking for KYC stop reduce the number of claims being made because they know many genuine users would rather lose their share of recovered funds but not send their KYC. A tactic which would in the end increase the share received by those that have sent KYC.
They may sell our KYC, who knows. And why wouldn't users complete KYC? Many nowadays have to do KYC with exchanges so I don't think it's a big problem but now after they have a tainted image, I don't even feel safe sharing my details with them. Binance itself had their KYC data stolen. They are also asking users who had already completed KYC to again go through the process.