I don't think that you are unaware that casinos have the right to ask for clarifications if they suspect your account. Any casino that offers total no KYC will go bankrupt because cheaters will take of them. If you are sure you have not violated any provisions of the TOS, I suggest you go through the process, and hopefully, your account will be unfrozen if you are clean.
Even with KYC enabled, if the casino is not strong enough to catch cheaters, they will go bankrupt.
KYC doesn't save them from being bankrupt; it's only that any casino that doesn't enable KYC is likely going to face legal action from regulators, and regulators always attack when the business has expanded to a big level.
I never said KYC would stop them from bankruptcy. I was just trying to indicate that KYC could help weed out cheaters from taking advantage of the casino. There are so many reasons other than KYC that can make a casino business seek relief from debt. You are correct that regulators demand KYC as part of the conditions of the license, but I was just pinpointing one advantage of enabling KYC.