I myself was surprised that after my wife's account was blocked on OKX, she received a letter that her cryptocurrency could not be withdrawn from the exchange and she would remain there as long as the lock was in effect. I have never seen anything like this before, so that would not allow to withdraw crypt from the exchange after blocking account.
So what rules did she break exactly? Are they suspecting your wife is doing money laundering or something? I can't imagine any exchange confiscating someone's money just because they don't agree to do KYC. If that's the case, people should avoid that exchange.
Speaking of forced KYC, I think Binance sent me an email asking me to update my KYC data, or my account will be frozen. I decided not to do that, but I can log in and use my account just fine. Obviously, I can't trade, but I can withdraw my money, which is very similar to the story people shared. Even my local exchanges do this, too. I guess this is the standard practice that they follow.