Do You Think Microsoft Should Have Banned Modded 360 Users From Xbox Live?

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Microsoft banned Hacked Xbox 360 users on the grounds of "cheating" would occur to games online and decrease gameplay enjoyment. Now, the hacked xbox 360 does NOT allow you to cheat online but merely play backups (copies) only so where do microsoft get their justification for banning thousands of users online? What do you think? And where you banned from Xbox live? Your opions please!