Legally they can and as a legit casino they are obligated to confiscate your money.

But your story is confusing. You say you already provided id, while you still was living in unrestricted area?
And you are saying that you changed your citizenship to new country after that, while having money in your shuffle account?

How did that happen and why didn't you move your money out before you got citizenship of another country? It's usually not a fast process and you have time to make plans.

I am just interested how this happened to you, not because i could help you, as VPN on itself is a breach of TOS and enough for them to legally freeze your assets.