Of course they're lying. Quote
he termination of CloudFlare's CDN services would have no impact on the existence and ability of these allegedly infringing websites to continue to operate
If it would make now impact, why are they in business? Kind of hard to get people to buy a service that doesn't do anything.
There is a difference between impacting ability to operate and impacting ability to operate at a given service level.
Cloudflare is absolutely correct. If they kick off sites that are being accused of copyright infringement, it doesn't make those sites go away. It's just more cost effective for the alleged criminal enterprise to use a CDN service, not necessarily cost prohibitive to not use one.
Cloudflare is being asked to chop off revenue streams based on a flawed premise. If it actually would make a difference, I'd say yeah, they should boot 'em, but since it doesn't, I kind of see their point and I'd probably say 'screw that' if I were in similar circumstances