Yup. Pretty much every exchange will have something in their Terms of Service which allows them to seize your coins and either keep them for themselves or turn them over to someone else if you breach their Terms of Service.
Take a look at some of the big exchanges for example (emphasis added):
Binance
You agree that Binance shall have the right to immediately suspend your Binance Account (and any accounts beneficially owned by related entities or affiliates), freeze or lock the Digital Assets or funds in all such accounts, and suspend your access to Binance for any reason including if Binance suspects any such accounts to be in violation of these Terms, our Privacy Policy, or any applicable laws and regulations.
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Except as set forth in paragraph 4 below, once a Binance Account is closed/withdrawn, all remaining account balance (which includes charges and liabilities owed to Binance) will be payable immediately to Binance.
Coinbase
We reserve the right to cancel and/or suspend your Coinbase Account(s) and/or block transactions or freeze funds immediately and without notice if we determine, in our sole discretion, that your Account is associated with a Prohibited Use and/or a Prohibited Business.
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You will be permitted to transfer Digital Currency or funds associated with your Hosted Digital Currency Wallet(s) and/or your USD Wallet(s) for ninety (90) days after Account deactivation or cancellation unless such transfer is otherwise prohibited (i) under the law, including but not limited to applicable sanctions programs, or (ii) by a facially valid subpoena or court order.
Bitfinex
Such sanction may include removing or declining to post any User Submissions you provide, making a report to any Government, law enforcement, or other authorities, without providing any notice of you about any such report; freezing or confiscation of any Fiat funds, property, proceeds, or Digital Tokens in your Account (including any subaccount orany Digital Tokens Wallet) that you have on the Site; and, suspending or terminating your access to any Services or Fiat funds, property, proceeds, or Digital Tokens from any Digital Tokens Address or Digital Tokens Wallet. Bitfinex may, at its sole and absolute discretion, seize and deliver your property to any applicable Government, law enforcement, or other authorities where circumstances warrant or in accordance with Laws
When you deposit coins to an exchange, they are very quickly swept in to a central hot wallet and mixed with every other users' coins. Should your account be terminated, then obviously the exchange isn't going to look at your balance and send that many coins out of their hot wallet to some burn address to sit inaccessible forever - they are simply going to absorb your coins in to their own balance sheet.