Well, he would lose in court and I personally never received a "cease and desist letter." If it forks, it's the community that's forking it....he'd have to send everybody a "cease and desist." And, the intent of the contract is what will take precedence in a court and it was obviously not intended for the exploiter to steal all our funds. Maybe he'd get one count of wire fraud per investor frauded....He should take the profits from his ETH short and run before a hot curling iron introduces his butt hairs to a perm, IMHO!
In the stock market, if you spread bad rumours and short the stock is a kind of inside trading and is a criminal offence.