I hope they sue and win. This bull###t needs to be fought.
IANAL, but DO's ToS is loaded with weasel words.[0] So if they can sue in some jurisdiction where the binding arbitration and liability limitations don't apply, maybe they could at least get a fair settlement.
It would probably be worth it to restore trust: Refund all the money they've taken from this company for the last year, and apply a credit to their account for 3x that amount, say.
Sadly enough, yes. I'm sure that it's covered in DO's ToS.
But the DO CTO did basically admit fault in a public forum.