Well, the part where the other developer violated the license seems clear enough.

Blackmail is a valid explanation if you don't have another more powerful recourse. But they do, they can just report them to the law.

Is it intended as a threat then? Perhaps. But a threat is still much better than the nuclear option of reporting him.

What else could they do between (a) asking him (which they seem to have done already), (b) threatening him with reporting him, and (c) reporting him? Bend over and take it?