The fact that you're paying cash, shouldn't be the trigger to increase your earnest money. But the seller's agent, at the seller's direction, can request anything they want. You don't have to agree... and there is no law, that I know of, that regulates what they can request.
If you're concerned that a law has been broken, consult with a real estate attorney. While I am an Illinois real estate agent, I do not practice law, and this should not be considered legal advice.