if pinnacle is the one who is asking for KYC then this doesn't make sense at all and probably just a move by odyssey trying to collect some quick buck
pinnacle can't really be abused and there are already tons of bitcoin sites offering pinnacle with no KYC
if it was orbit then maybe it will make a little sense since orbit is raising the commissions for some players only

did you reply to their email BTW ? can you refuse the KYC and ask them to return money and close account ? I really doubt so but worth a shot