I would suggest that what the original customer did was theft. They would still be reaping the profits of their thievery had not stopped it.

Legality is the hard part, which is likely why this company went the way it did. Most people would prefer a 'This site is down due to non-payment' or a 'we are down'.

That's trying to swim upstream without a paddle, this is slippery enough without trying to on the right side.