I believe what happened here is that the casino blocked the user's withdrawal (due to an arbitrage flag, as mentioned), pushing the user to submit their KYC and bam! All the facts, including the previous ones, were revealed! If there were no shady activities involved, BK8 wouldn't complicate matters, even regarding withdrawals IMO. This also explains why the user in question faked his/her phone number...
At least BK8 have some policy to return the initial deposit, in other casino they have a worst things (not refunded anything and just closed or blocked user account without any refund).
True, the policy is too lenient for abusers, but at the same time, they don't want to "steal" the user's deposits, even though it's just a marginal thing.