No they are obligated to give full btc refunds because it was specifically stated in the ToS and also confirmed in an email to support staff.
Perhaps morally so, and perhaps in some non-US jurisdictions (and maybe a state or two that has wildly different laws on contractual remedies), but in nearly every US state, the remedy for a violation of a contractual duty to deliver a fungible good is the market value of that good at breach, and unless the parties agree and execute otherwise, that remedy is in legal tender.