What sort of crime are you envisioning that exploiting this would fall under? It's not always fraud to satisfy a poorly written contract, although that is commonly the case.
That person committed fraud. My point wasn't even about cryptocurrency or DeFi.
Here's a simplified hypothetical example to help you understand the legal nuance: I offer all of my money to the first person that can solve 5x5, and I errantly believe that it's a difficult problem to solve.
Taking advantage of bad contracts can be legal depending on various nuanced circumstances. If the potential payout is lucrative, then it makes sense to consult with legal counsel first.
I am not making a judgement about this specific case.
The "Etherium merge moment" is entirely different and it irks me to see it compared favorably with this project. It didn't 'solve' proof of work. It assigned positive value to past environmental harms. It prevents more proof of work, but doesn't solve past harms.
The only 'solution' (more a mitigation) to Etherium proof of work's environmental harms is to devalue it.
Unlike your example, this project actually seems to be a net positive for society that wasn't built on top of unnecessary harms.