And so you understand that this is 100% legit... Here is their apology after they branded their potential slaves.
My point being that it's the cheap way out for the startup - much cheaper than dealing with lawsuits. If their victims were likely young & dumb enough to do it to begin with (not putting them down because we've all been there), then they're likely also dumb enough to let the startup off the hook just as easily - yet another way the startup is taking advantage of them.