I wonder why they settled

I’d imagine because they charged for access to piracy-specific functions of the tool and knew they couldn’t argue a case.

It was a dumb move for them to add functionality for unreleased games in the first place, and an even worse move to charge money for it. It makes it a lot harder to convince a court that your tool is for backup/archival purposes only, when you have features that could only work with pirated materials.