KYC is going to be a mainstay in the crypto world at some point. Governments aren't going to allow people to make a dime and them not get their 9 cents of it.

I don't use freebitco but have kept up with the drama. I messed around in the past with them and get emails now and then. Is everything back to normal with the site?
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Do online crypto casinos really have any kind of relationship with the government? I think that the casino license asks and allows them to demand KYC from customers. Since there are people who will give up on winning because of KYC requirements, casinos use that as an advantage. Not every casino but some really do.
Has there been a moment when any government asked any casino that the user was probably a criminal and the KYC verification helped them to identify the criminal?

I strongly believe that crypto casinos formally hold Curacao or Costa Rica license and they aren't regulated by any government. If it was, then 1xBit and its sister sites wouldn't exist. I think that there are far more rights in favour of crypto businesses and users are left without support, instant exchanges are a good example of that.