That's fine but your exchange should be sophisticated enough to recognize that not everybody who deposits coins then immediately wants to withdraw them is a criminal or attempting to engage in money laundering. KuCoin should attempt to be a bit more selective with whom they spring KYC requests on, and for what reasons.
In no case should KYC be used as an excuse to keep customer funds unless those funds have been explicitly linked to a hacking event or theft. You should allow the customer to withdraw the funds to the address which they sent them from, at the very least. Otherwise, it just comes across like you are using KYC as an excuse to steal customer funds.
I agree on you this is another bad case of exchange using KYC to steal funds I support a thread created on this case in the scam section I will not wonder if Kucoin will end up in the category of Yobit or other scam exchanges who always find a way to steal from their traders, the guy who created the scam thread should now create a flag for Kucoin this is to warn traders on how Kucoin treat this kind of case.
Thank you for your suggestion. Please understand that every exchange is developing its own risk management and anti-money laundering policy. It is difficult to say whose policy is the best, though we are open to suggestions and are willing to improve. For now, we would appreciate if you could respect our rules. Thank you for helping us create a safe and fair trading environment.