Since his BTC is reminded as risky by the KYC third party, so we cannot accept it and we agreed to refund it to the original BTC address. It really takes time to get approval in our system. He just warned us to refund immediately and refund to another new address...
Bitcoin is not fungible. If you have Bitcoin with a "bad" history, you can't use that Bitcoin with a regulated entity. Same for regulated Bitcoin-exchanges. What is bad history is determined by chain analytics companies and includes hacks, scams, bad country, peer to peer exchange, coin joins, etc.
Many people desire frangibility and claim Bitcoin to be fungible. However government regulation enforces non frangibility of Bitcoin by enforcing discrimination depending on the transaction history.