We decided on an alternative which is to donate the full sum involved (20 mBTC) to a charity of the community's choosing. In addition, BTC365 will match this donation (another 20 MBTC) as a gesture of goodwill and gratitude. We put it to the community to come forward with up to two charity organizations to receive the donations.
It costs me a lot to believe that your site has people who think that way, money from someone who won by merit is not to be donated without permission from the winner, what you are doing is absurd.
We have learned much from this incident and have patched our Customer Support process and Terms and Condition accordingly.

you are practically saying that from now on whoever uses your site and wins you will take the customer's money and will donate to charity, this is what you learned from this problem that you created yourself
BTC365 is committed to providing the best betting experience to our players.

We seek the community's understanding that we are unable to do business with syndicates, informed punters, or any party that enjoys an unfair edge over our normal customers.
syndicates?
informed punters?
what are you talking about? you retained the owner's fund using nonsensical argument that he was involved in abnormal activities