How are they even making things up here? If you read through the entire thing they have a very valid case against Discord, ranging from the UX being confusing (i.e. "data protection by default") to actually storing the data they are not allowed to (i.e. illegally).

If you operate in a jurisdiction you operate by that jurisdictions laws. Do you think European companies don't have to abide by US laws when operating in the US?

That would be a problem. However, that is not what happened.

Discord (the company) was fined for multiple breaches of the GDPR regulation.