The “real” world works however the people want it to.

As it stands, it works with laws that protect the rich and elite with superior rights.

Someday, maybe the people will decide on a more equitable system. Nature and mathematics might be heavy contributors to that system.

Do you know how BLM land works?

If you find a valuable resource on it, you can register it and you get exclusive access to mine it.

Look it up.

Hacking a private corporate system, which is generally on closed nets and requires an internal actor / phishing, is significantly different from exploiting a code fault on a public network.

Trustless systems rely on mathematics to secure their networks. This is both the revolution of them and the risk. If you build a system of value and it is on a public network, and you fail to properly secure it, that is supposed to be the risk. You lose money, hopefully go bankrupt / lose credibility, and a more efficient actor eats your lunch.

Treating it like a traditional system with these unspoken legal safeguards when it uses a public blockchain and public network is absurd.

No.

It is more like finding a gold mine on public BLM land. It is over treacherous mountains only experienced climbers can access. There are no signs or doors saying it is licensed to anyone; indeed, it isn’t officially registered with BLM. So the climbers go in and take as many gold nuggets as they can carry.

Unbeknownst to them, it was a mine discovered by rich and connected people who have cronies in BLM. Rangers go and arrest the climbers and say that you aren’t allowed to climb, climbing is illegal, and taking gold from that mine is illegal because someone else found it and dug it, even though they didn’t properly secure it nor did they put up any signs. They assumed the mountain was enough protection.

This is closer to the situation.

So they discovered faulty code and made some money?

Can anyone explain to me how this is illegal?

The code is a contract. If someone writes bad code and loses money, then write better code - just like if someone writes a bad legal contract and loses money.

The justice system is awful.