If an exchange decides to seize your Bitcoin, that's a civil matter between you and them. It happens not infrequently, as most exchanges use tools with questionable reliability to reduce their perceived risk. Generally speaking as a regulated business, it's their job to attempt to reduce any instance that may be money laundering or identity theft.
Is it true that a cryptocurrency exchange could freeze any account with suspicious bitcoins?
Yes, subject to terms & conditions and applicable law
What to do if the crypto exchange has frozen your account?
Contact the exchange.
Best to store Bitcoin in a standalone wallet