The argument would be "this nation state is an evil eavesdropper thus I won't work for it when my area of expertise is privacy/crypto etc.". I think that's taking it a bit too far because "the state" is pretty big and its sole purpose isn't to eavesdrop (I'd hope) but I wouldn't say that position is unreasonable.
I would agree that as long as the specific arm of the gov that spies isnt involved in the conference, its fine. The articles argument does not say otherwise either. It highlights that palantir has opposed interests to the attendees of the conference.
Id say the author would be fine with a state department sponsorship as they repeatedly have backed secure communication for dissidents et al, but would oppose sponsorship of the nsa.
Its not just "on principle" either, but the dangrr that i terested sponsors can influence what gets presented and how. Like how the nsa would push an encryption standard theyve already broken.