Who gave this anonymous Whitebit proxy exchanger the right to demand anything from anyone? Their Terms of Service mean nothing because this is not a legitimate company, and what is happening here is illegal. You can claim in your TOS that you have the right to hold onto all coins, but that doesn’t make it legal, and it doesn’t change the fact that this situation is theft.
I will never defend any exchanger or company that confiscates or freezes someone's funds using excuses and bullshit like money laundering, financing of terrorism, and other nonsense. But at the same time, I am not going to use such exchanges. Whether or not what they are doing is legal or not is not for me to say, but you have a choice to inform yourself about the service before depositing money into their custody. You can ask questions, read the terms, and understand what they mean. Doing some research and finding user feedback online can also tell you a lot.
Sadly, if you use a service, then you are bound to their Terms and Conditions. You might not like it but if you use it, it means you accepted the terms however predatory they may seem.
The real mistake was trusting you in the first place, and if anyone continues to trust you, they’ll only end up making the same mistake.
You are on the right track now. Don't send your coins to a service that has a history of shady business practices. It's better to lose a few percentages by using a trusted service than trying to save money by using something semi-good that then turns into a nightmare.