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Sounds about right. Their TOS does say they can and will do that.
I never know what these mid-size providers can provide that the small providers can't. They don't have the features and guarantees of big clouds. They don't have the price point of small providers. I also saw Hetzner users complaining in reddit that the ST accounting is disabled thus it always show 0.
Hetzner has always had a very consistent track record of terminating accounts over false pretense, with little to no notice.
There was an incident a few months ago, when someone reported an image of two fully-clothed girls kissing on a fedi instance, claiming that it's child pornography. Hetzner then demanded that the entire instance be taken down within 24 hours.
They claimed that the fedi instance is focused on adult content, which is against Hetzner's TOS. The instance was meant to be a safe space for trans women and LGBT folks, and had absolutely no focus on such content at all.
They pull off this shit while continuing to ignore reports concerning pedophile sites, port scanning and exploit attempts coming from their network
https://woem.men/notes/9ragjwecxwul3nis
single ip per box, ancient auction boxes.