I may have repeated some stuff already mentioned on this topic by other players, but I mostly wanted to include links.
Yes, I agree that ChickenSmoothie should have made a site-wide announcement notifying players of trade reversals, notifying players how to fix-debt, and urging players to update their passwords on their accounts. I do believe that if ChickenSmoothie was aware that there was hacking occurring that they should have temporarily-suspended trading in order to fix the issues early on and allow affected players to figure out what to do. The whole situation has indeed been kept quiet and unaddressed publicly, even the most recent announcement does not give context to the password update reminder. (But there is mention that there will be future improvements, as to what those are, I am unsure, and would be nice to get a general idea on the improvements)

According to ChickenSmoothie, the website was never compromised and the hacked-accounts are due to the player having a matching username/password as a different website that had a data breach. So there was no data-breach on the ChickenSmoothie Website.
(Reference -Lacuna+191195)ChickenSmoothie is unlikely to compensate players, especially gifting C$, C$ items or Store Pets if they are unwilling to “pardon-debt” and their concerns would be how gifting premium currency/pets/items will affect the trading economy.
ChickenSmoothie has no intention of setting C$-Debt to 0. Their solution is for affected players to give the pound the pets/items that were purchased with that C$. If players purchased pets/items from the C$ store then they must request the transaction to be reversed to remove that debt.
(Reference+Celozon+52287)
Summarized Version:
The reason why users in debt cannot be reset to 0C$ is because they own/owned pets/items that originally should have been paid for. Players have the option to use those owned items/pets to basically sell to ChickenSmoothie who inturn will give you the C$ you paid for said pet/item.
Which in turn put you to owing 0C$ seeing if you still have those pets/items.
It is akin to the player using “loaned” C$ in my opinion. They spent C$ that they never actually had (despite believing they did). And now are either required to give ChickenSmoothie the items/pets they never had a right to/or earn C$ through selling unwanted pets/items to get out of the debt. (the staff stated that you do not have to spend actual USD to get out of debt) Regardless, the decision appears to be final as the topic I had made regarding the Pardon of C$ debt is locked.
(Reference)The solutions being offered are not terrible as it would make it like the situation never happened. (so it cannot be classified as ChickenSmoothie stealing/using extortion/taking away pets. As at this point they gave you a loan to buy pets/items which can be repaid overtime) You did not lose any C$ as you never had that C$ to begin with. You never should have had the pets to begin with either, as you never had the C$ to buy them. (I guess technically you served as one of those NPC’s on a game that converts unwanted items into currency for another player).
It is still unfortunate for players who had already traded off the pets/items that they had originally bought with the C$, as it appears a solution for this scenario was not stated. It is also unfortunate for players who generously sent the C$ to friends/strangers as surprised gifts, as they never traded the C$ for pets/items. It may also be a lot of work and stressful for the player if they had purchased multiple pets/items as they will have to sort through pages to select them for the pound. In a way, I guess that would make the players in-debt the middleman/middle-person in converting the person they purchased the pet/item from into C$. (Someone does not want their pet, so they give it to you for C$. The pet is therefore basically converted into C$ as you do not get to keep it).
I still stand by my idea that C$-debt should have never been a possibility as players did not know that the C$ they spent was not rightfully theirs. (But I do understand where the staff is coming from and why they rather players either remain in debt or give the pet/items to the pound, I am not fully-against the idea as it does get players out of debt, and they technically lost nothing if they give the pets/items that was purchased with the C$ to the pound. But what if the player no longer has the pet/item? What if the player was generously giving the C$ to other players as gifts?)
But if ChickenSmoothie is not compromised and it is due to a data breach on a different website. That would mean that players are still at risk of having their accounts hacked, and players are still at risk of going into C$ debt/losing the pets/items they adopted as there will be reversed trades. (unless players change their password. It would honestly be better if a mandatory password change was required)
I would also like if ChickenSmoothie would be more interactive publicly on the situation, especially before the Summer Event arrives. Is it safe to trade again? Will it be safe to trade during the Summer Event? Is there still hacking occurring? Why was there no public announcement earlier about there being a data-breach offsite that put players' ChickenSmoothie accounts at risk? (I assume that some of these questions can only be answered by Nick/Tess since admins and mods only have so much freedom on addressing the situation and are doing their best with the situation)
wrote this quickly since I am busy.