The facts of this case are not legally distinct from any other slumlord, they just have a better marketing team who is fighting the battle in the media and public opinion.
The landlord signed a long-term rental contract on a unit that did not meet rental code. Yes, the tenant probably knew it was out-of-code when it was rented. Just like any other person renting from a slumlord.
Other than it being Airbnb, and other than the person trying to claim the value of the rental is zero because of the livability issue, it’s a big-standard slumlord situation.
The proper move is to escrow the payments etc but generally you have a lot of rights as a long-term tenant (and many hotels/etc will take specific steps to avoid you being considered a long-term tenant as a result) and you don’t lose them just because the owner is a slumlord or allows the unit to fall below code.
Rentals are really a high-risk market with a lot of legal protections for the tenant, but everyone hopped into the market over the last 10 years thinking they’d just double their money overnight, and this is what happens when a tenant who knows the rules meets a landlord who doesn’t. The number the landlord recovers won’t be zero most likely but they also won’t get it in a timely fashion, or possibly at all.