It is a bit ridiculous. Are people going to start pulling things from projects because they find out that FOSS is used heavily by the intelligence community?
If an author of a free software believes that it is against his own morals to indirectly assist some organization that they see as immoral then, yes, they have the freedom to stop working on that software as there is no obligation on their part to continue doing so.
I should have clarified my point a bit. I'm not debating ones prerogative to do it. But we as nerds know the things we make can and are used by "bad"* actors but typically say it's better for the common good so we should keep it. Things like encryption, heavy math libraries in the world of nuclear physics, rocket science, VPNs, etc.
So when we discover one bad person using our software and subsequently yank it, aren't we being a bit hypocritical?
* I quote that because not everyone agrees that DHS and ICE are bad actors and want to avoid a political tangent
YMMV, but to me there's a difference between directly creating financial benefit for the owners of a largely closed software ecosystem--and Chef in practice is a largely closed software ecosystem, it's single-source and they're doing their damnedest to squeeze money out of their users right now--and more general open-source publishing.
It's their prerogative to do that if they so choose. If you don't like it, don't rely on it. Get commercially licensed software where this can't happen or write your own.