Not only was Crunchyroll a pirate site, they were considered the absolute worst kind of pirate site. Fansubbers of the day viscerally loathed them because in ripping off and spreading the fansubbers' work they broke every rule of etiquette that fansubbing had informally struck to coexist with studios, distributors, and so on for decades prior.
For those who don't know, in antediluvian days fansubbers and scanlators abided by a gentleman's agreement that basically boiled down to not competing with or poisoning the well for actual distributors by:
If you've ever watched fansubs or read scanlations from that era, you'll have seen big honking warnings that say something like "THIS IS A FANSUB, IF YOU PAID FOR IT YOU'VE BEEN RIPPED OFF" and "PLEASE STOP DISTRIBUTION IF THIS EVER RECEIVES A COMMERCIAL ENGLISH RELEASE".
Crunchyroll and their various manga-equivalent siblings deliberately and aggressively broke all of these rules. They advertised, made things as accessible as possible, scrubbed fan marks and warnings wherever they could – lowest-of-the-low stuff in the interest of getting their viewer count as high as possible.
Then, when the heat started building, they turned around and sold themselves as a distributor to the Japanese, starting with the thin edge of the wedge with studios who were in financial straits and were willing to embrace this new, cutting-edge way of distributing anime through the Internet. The Japanese studios and production committees didn't really understand that Crunchyroll were actually ripping off fan translations or what that meant – to them it was all "durr, pIrAcY" – and had no translation capability of their own; Crunchyroll did everything they could to reduce it to "wow, website! wow, subtitles! wow, viewers! wow, future!". (This lie helps explain why Crunchyroll didn't immediately remove fansubs after they struck their first deals – had to maintain their image!)
That was it. Crunchyroll scrambled to recruit whatever fansubbers they could under a cynically-deployed "wow, fansubbing can finally be LEGIT" pitch, and over the next few years played both sides of the fence. Behind closed doors they had absolute contempt for everyone involved, of course – fucking basement-dwelling NERDS translating Japanese porn cartoons for FREE, dumbasses don't even realize how much we're getting paid off their enthusiasm – but they knew how to keep their public messaging on point and it wasn't like the fansubbers or the old guard weebs had much way of fighting back. (Quite a few of Funimation and Crunchyroll's Glassdoor reviews note how much the companies' leadership cultures look down on being "fannish" – now you know why!)
The rest, as they say, is history. The gentleman's agreement had been burned to ashes. Crunchyroll's example inspired a new wave of ripoff reuploader sites (e.g. Fakku), eventually old translators either dropped out or joined up with Crunchyroll. "Fansubs" don't really exist any more – it's mostly just tinkering and re-encoding existing simulcast releases – and on the scanlation side of things you have waves of South-Eastern Asians who beg to take "commissions" and advertise their Patreons wherever they can.
RT: https://mugicha.club/objects/f0e2f92f-89f0-44ad-94a0-7fb0fbcd0230
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