Based on the details of this thread this accusation is valid. OP said Cloudbet asked him to verify his identity as the system suspected that he is from restricted country.
His claim is only valid if he has no other Cloudbet accounts and if he isn't from a restricted location. Since he accessed the service using a VPN from a country that is banned by Cloudbet, they are trying to find out who he is and where he comes from.
If they confiscated his funds for having multiple accounts then they should have mentioned about it without asking for KYC. Anyway, Cloudbet reserves the right to freeze user fund if he/she create more than one account (terms 7.1.10.2)
They might be just investigating if he is. If they believe he is using multiple accounts, maybe those have or will receive the same KYC requests. They are asking questions, OP isn't providing the answers. I understand that people don't want to undergo KYC (I wouldn't either), but something has aroused their suspicions apparently.
This accusation would be more valid if OP hasn't received the refund by completing the verification.
If OP did the KYC and Cloudbet still confiscated his funds without explaining the reasons and showing/having proof to support those claims, it would be a 100% scam.