I don't understand why Instagram would ban the company from ever advertising again. To be honest, if I was the one that got tricked, all I would think of is how awesomely they tricked me.
Probably because it can be construed as a form of fraud, and while some people might find it amusing, most people tricked by it would have been upset.
Maybe because they finally realized that advertising (on the internet) has gone too far in their ridiculous hunt to steal attention driving people to Ad-Blockers?