I had an experience like this, I presented a driving license but was then told a birth certificate sent physically to be examined would be required. Suffice to say I never got my cash back, it wasnt a large amount and I arbitraged some of it. This site sponsored a major esports team and the entire site packed up a while later and left people without returning balances unfortunately. Problem is some requests will be genuine but I should have known as soon as they started moving the goal posts for requirements.
This is one big lesson we should learn, any business doesn't just fold up over night, there are usually signs like the one you said leading to their exit.
Something similar happened to me but it was with a crypto exchange, though not related to kyc, but related to signs some of this platforms show before they pack up.
I was a very active user of Bkex exchange, I was already kyc verified so they had no way of asking kyc again, they used to process withdrawals very fast, no matter the amount of money one is withdrawing, but at some point, things changed, them processing even a $100 withdrawal began to take hours, when ever I reached to the customer care to know what is going on, what I usually get was "be patient" you will get your money soon.
This stretched for several months, I should have seen this as a sign and withdraw all my money from the exchange, but really didn't think much of it, after about a month going to two months, they stopped processing withdrawals, I had my $440 in there, and that was how I lost the money, right now, they are no longer online.
So, yeah, there always signs and if only we can be attentive enough to understand the signs when they begin to show it, maybe we sometimes be quick enough to get our money out before the unexpected happens.