...how bad can this get if anything happens to the website system?
Locked or seized funds for failed KYC in case you're suspected of any wrong doing or you win big.
Is this a wrongful approach to online casinos that requires KYC?
Yes. The reason is as stated above.
Or any of you have a better solution?
Let me reiterate what other have said that not playing in any KYC casino is the best solution.
I only submit fake information using throwaway accounts when I'm testing or checking out the features of a platform. I create a second one with real info because that I'm actually going to use it.
There must be someone like me on here that have their ways around this.
Keep in mind that the people behind those casinos with KYC could be watching or reading this thread hehe.