Microsoft Confirms LIVE Console Ban Wave to IGN

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From xbox360.ign.com:

"We have taken action against a small percentage of consoles that have been modified to play pirated game discs," a Microsoft spokesperson told IGN. "In line with our commitment to combat piracy and support safer and more secure gameplay for the more than 20 million members of our Xbox LIVE community, we are suspending these modded consoles from Xbox LIVE."

Microsoft also added this is a standing policy and isn't tied to any specific time-frame.
Full Story: xbox360.ign.com