Making a subreddit private is a built in, native reddit feature. If the mods are still actively moderating, just doing so in a private community, how is it breaking any rules? Sounds like they are just making use of a reddit feature.
The only way to really "win" here is to abandon the platform en masse, and delete all your content before you walk out the door.
"Stop quoting laws, we carry swords!" - Pompey
If you want to equate legal with morally good, the changes they are making to their API is technically not "breaking any rules" and banning all the mods that are shutting down subs would also not break any rules. Doesn't mean it was a good idea or that we should encourage it