Yeah it was pretty safe to play on Live with modded console, you could even use like 2 year old iXtreme firmware and still not get banned for a couple years.
But this year wave 3 hit, wave 4 hit, and banhammer hit. I won't be "surprised" if I get banned but I would question why they weren't mass-banning people for the last 2-3 years.
My conspiracy (oh wow this word has the word "piracy" in it, just don't mind the pronunciation) theory is that MS has trained pirates to play on Live and pay for Gold.
Now with significantly increased number of games that REQUIRE Live Gold to get all achievements, some pirates, after getting banned, would start buying games.