It took me a while to work out Sybil's veiled threat, but I guess what she'll do is cut Basil's balls off. A fairly common threat. Basil's retort means to say, "Well, you've already done that." That is, she's already emasculated him in the past... probably habitually.

ok i don't know if this helps: - If I find out the money on that horse was yours, you know what I'll do, Basil. - You'll have to sew 'em back on first.

We need more of the context to be able to answer this question.