In your situation, I think KYC is inevitable since you mentioned that you risked a million overall in your account and I might be wrong here but stake has the right to ask KYC if they want to.
Then again, stake probably overlooked your account for quite a while as they could be lenient on certain rules and I also think that confrontation between your host and Eddie triggered the KYC.
Based on their terms and conditions they sure do have the right to KYC. The issue I have with this is the way I found Stake was all of their paid streamers were pushing VPN and privacy etc regarding Stake. I even researched VPN's on youtube and one of the guys I watched was marketing a VPN and explaining how it worked on Stake's platform. Also I have many post from many people where host, Eddie and mods new they were in restricted areas. Even me being told my privacy would never be questioned. If you are going to build your business primary on VPN and privacy and allow me to sign up and then turn your eye when I start it seems a bit unprofessional that when I'm down a decent amount AND ban casino from my account you all of a sudden ask for KYC. There was also another player in chat that had been asked for level 3 KYC a day or so after me but yet he said he could still bet. Of course he could still chat as he was making these statements in the chat room. But me they muted me from being able to chat with anyone on the platform. Thanks for your feedback.