Honestly, this is an issue that's well beyond the court of public opinion. I support the OP in wanting to do a lawsuit, as that is the only way that both sides could lay all their cards on the table.
The OP could make a complaint to AUSTRAC if he genuinely believes that CryptoXchange is abusing AML/KYC requirements in order to keep his funds for themselves. Of course he might have some explaining to do if he took that option.