I think the problem is when KYC is required only when the user tries to withdrawal the money
Personally, i dont mind if I deposit the funds and the support says something like "Your AML score is high. Please, do KYC or we will send your funds back to the same address".
But taking the funds hostage and demanding KYC is quite unfair.
BUt I don't know any cases of similar situations which happened in betfury.
KYC can be asked to finish at the time of registration and you only can use your account with full features after completing KYC. Else KYC card can be triggered any time by many given reasons like suspicious activities, big wins, big withdrawals or your account hits the withdrawal limit and if you want to withdraw more, you must KYC. It's general and when using centralized platforms, people must know about this fact and that's why KYC is dangerous and useless.
I don't know about the case so I can not say that whether Betfurry was wrong and unfair with the user or not.