There is no rule that states repercussions for withdrawal of a submission and returning of prize money. That is egregious. Do not return any money. You have my support.
I have to note, I was an organizer and judge for Compo ‘23 but withdrew from them after some disagreements and dissatisfaction with how the compo was held. I had no part in this decision, but had I been part of it still, I would have fought tooth and nail against it.