There was a legitimate sale, without any breach of ToS. And while it is up to Apple to decide who can and can't use their ecosystem (although given their size, I strongly believe that regulations need to be made to avoid replatforming people), rendering not just a device but potentially multiple devices of a number of users over a few hundred dollars mistake would open Apple up to a lawsuit that would be in the thousands for most partakers - as most people only buy iPads as a late addition to their Apple ecosystem, meaning Apple just locked them out of their legitimate phones, laptops, watches, TVs, etc.
Not to mention that this was a third party retailer, who can't just willy-nilly block Apple accounts...