Grey hats committing extortion or blackmail -- yes, it is illegal. If they were white hats, all the bitcoin should be returned. If folks then want to express gratitude by gifting a reward, Blockstream and the community can do so.
But, putting the law aside, there is risk to using sidechains. Users should not be putting more funds on them than they are comfortable losing. Everyone in the community knows that code is regularly proven vulnerable. It is not a secret. So they are taking risk knowingly. They are not naive and innocent bystanders, as the "plebs negotiator" presents -- at least IMHO. And they should be honest about it.
