Do they use intentionally broken processes designed to frustrate people as an alternative to telling people they're blocked?

It would explain a lot of things. It's also an absolute dick move and should be illegal (but likely isn't yet).

I'm not familiar with Wise's internal rules, but based on fraud prevention practices, it's highly likely that a financial institution would not disclose whether an account is soft-blocked/suspended. If they did, fraudsters could exploit that information to adjust their tactics.