" why doesn't this behaviour break a contract or agreement, when so much Steem was delegated to them?"
I note that the delegated funds were never at risk. That's a beautiful thing about delegations, and that thing changes a lot about how businesses can operate. While I do agree that due diligence regarding delegations is good, clearly it's not risking the principal and can be done on blind faith.
I actually see that as a vast improvement in potential business operandi. It is an example of my thesis that technological advance increases mutual felicity and beneficence, and I'd be sore if some kind of code or program made it harder to delegate to folks you have faith in.
Even if it only makes it harder for Stinc to delegate, I'd be sore about it. The present delegation mechanism falsifies the old saw 'Nothing ventured, nothing gained.'
Stinc, and we all, can gain from delegations that work out, while delegations that don't simply return the principal to the stakeholder.
Beautiful!
There are still these little things called opportunity cost and yield. The delegation could have been used more fruitfully elsewhere, even if they didn't risk the principal. Blind faith is never a good way of allocating resources, in any way or form, because there are always alternatives to delegate to that don't require blind faith but do give some guarantees. This applies to delegations just as much as to investments.
While I'm not claiming that blind faith is the best means of exercising due diligence, I am trying to point out that even nothing better than blind faith is able to preserve the principal delegated by Stinc, and that the devs and management of Stinc are the best arbiters of the effort they effect to craft the future of Steem, even if mistakes are made.
Certainly better due diligence and specific guarantees could be undertaken for large delegations, but given the lean team extant, I suspect that there is a point at which cost/benefit is attained which is far lower than is traditionally possible.
I do reckon better due diligence, and some kind of expressed expectations and performance is undertaken hereafter, given the manner in which dlive burned the community. However, I am not convinced much greater benefit might have been attained were even far more restrictive and costly impositions undertaken.
The opportunity cost of delegation is pretty damn low, and the potential yield may not have been much greater in actuality than was achieved.
Dunno, but the preservation of principal, and the cost to dlive of it's poor ethics may serve to lower the cost/benefit break point to practically blind faith. I'm not sitting in that seat that @ned is, and can't really second guess him or the rest of the Stinc team.
I don't doubt they're giving this event a lot of consideration, and that they will endeavor to best spend their efforts going forward.