One problem is that the law significantly changed right under their noses. I don't think that they have either a significant development team/effort for their platform, nor a very good revenue. It's basically a very old chat platform I used about 15 years ago...
Regardless of the law, it's completely irresponsible to store passwords in plaintext, and it's been widely considered so for decades - the company's behavior here is inexcusable, and I really can't understand why anyone would try to defend it.
Even if it had changed right under their noses, that would still be OK in my book. The Lawmakers are elected by the people (somewhat -- the EU could be more democratic, but that's a different topic), and they should therefore be able to change the laws on the behalf of the people.
That would have been a reasonable argument if they were found to have been using something like DES-based crypt(3) to hash their passwords. But they didn't, they were just plain text.
