During Project Chanology people on 4chan distributed the LoiC DDos software, which led to many kids without any opsec to commit a federal criminal offense under the Computer Fraud and Abuse Act (CFAA), and allegedly many of them had unpleasant visits by law enforcement.

But OP is probably confusing these shenanigans with Lulzsec, an supposed anonymous hacker collective but really FBI-led operation ran by their informant Sabu, who supplied hacktivists with targets to hack and later jail them (for example Jeremy Hammond who was sentenced to 10 years in prison because of this).

I believe they're referring to LulzSec. IIRC, they created a "ddos app" called orbital cannon something-or-other that was designed to take down paypal and visa for limiting payments to wikileaks. Interesting times.