That's what I think is the reason why your account froze and ended up forcing you to verify KYC your country is one of the restricted/prohibited locations according to their terms. They don't even have an announcement or inform their customers that they are going to update their terms.
I do not think so. For example, I remember that I submitted my data (without sending documents) some time ago (I do not remember the date, but sometime between March and June) and I was allowed to withdraw up to $5,000. If there was a ban, the UK would not have been shown to me as an option and I would not have been asked to send data.
In addition, the data that is required is a copy of the passport and a selfie, which is not related to the country because they did not ask me to prove the address. For example, a British citizen can use the platform if he was in a country that does not have restrictions.
2.2 Note that we may not make all of the Services available in all markets and jurisdictions, and may restrict or prohibit use of all or a portion of the Services from Restricted Locations
Note regions/Locations, not nationalities.