Honestly, I had no idea about any of this before looking over this thread. I had used TE many times in the past couple weeks, and thought nothing of it. I assumed because it was an online access, they got the information about your island through those means, but so far from what I have looked at, TE hasn't even come out and said much about how they get the information, nor were they even confident to if it violates the ToS. Here is an exert from one of their statements:
"Whether Nintendo would think we violate their ToS, and if they would act on that, we of course can't say. If they did act, we think the most likely outcome would be some slight changes to turnip.exchange, not the banning of individual users who hosted or visited an island."
Source:
Which honestly doesn't make me very confident in using their services anymore.
I will say, they seem to be focusing on their Patreon heavily, and not much in the way of giving their users answers so we can decide for ourselves weither we would like to continue to use their services or not beyond saying 'I'd rather be safe than sorry'. Which honestly, is NEVER a bad route imo, and one I will be personally taking as well. I just think it's crazy that they are not in any way trying to ease the minds of their users and instead trying to point fingers at anyone else, saying that they are just jealous of their fame and fast growing community.
I have seen them trying to soothe minds about how they store data, but honestly I don't think storing data is really the issue here. I think how they obtaining the data is what needs to be explored and explained by TE, but will we ever get those answers without Nintendo pushing for them? Probably not, the way they are dancing around this.