I'm curious what exact betting behavior landed your account in this situation. The only thing that I could think of off the top of my head is that you must have been using some sort of martingale betting style to where at some point they felt the need to put a cap on how far you can take that strategy. Is it possible this or something like it is the reasoning behind your new limits? If it were me, I'd take the hint and make sure my funds were protected, but reaching out to them and seeing what they're willing to do for you or what explanation they have seems like it would also be a good idea.
Yes, that's the only scenario that I can think where a sportsbook might limit a player another scenario that I can imagine is the OP having multiple accounts or using multiple accounts from the same IP and instead of banning the account, they are just limiting it majorly. So that the usage of multiple account is curbed. It could also be that you've reached your betting limits without KYC and that you'll have to go through KYC(since you've mentioned that your betting amounts are large). Only after the user is approved, they will allow you to continue betting without limits.