First, it was your responsibility to read all the terms of service and conditions of whatever you are entering into. The moment you agree with their policy, you give your consent for them to do various things to your account the moment you don't comply to what they are asking for. In this case, you aren't aware it is possible for them to close your account for not sending the things they asked you, hence the account closing happened.
Even if the account is closed, it sounds wrong to just take someone's crypto over a silly thing such as late KYC verification. My gut feeling is that they should at least return him his balance, but I don't see that happening because of some legal clause inserted into their ToS.
It's sad to watch... FJ also closed my account from inactivity but I never really deposited there. Blows my mind why casinos use 3-month inactivity as a reason to close accounts.