I have heard about gambling sites seized people's money when they are gambling from restricted countries but have you experienced this on any exchanges?
I do not blame any casinos or exchanges for deciding to seize any of their customers money that violated their rules because they have the right to do so. I have also fallen victim of leaving my VPN on when accessing Binance and I was asked for some verification which I did successfully and had no issues. During that time I did not deposit or withdraw money therefore I would not know if any of my assets were frozen since that is the exchange I use for trading. The only time that I was forced to do some KYC was when I wanted to withdraw and the money was big therefore Binance requested for my KYC details and after it was summited I got my coins in my wallet. Since then I have not encountered any issues but I think when there is a suspicious movement on your account or you want to withdraw a big amount, they can always ask for more verifications.