Even they you were to distribute the code after the fact that doesn't forgive the copyright infringement they did early. In the end releasing the code doesn't do anything for them other than give away their IP. The best option in this scenario for them is to stop distributing the binary to avoid willful infringement and then work to remove the GPL code from the project and then start distributing it again.
Do remember that the GPL is not a EULA. It only applies when you make copies of the code.
Also random people can't sue over this infringement. Only the copyright owner of the code can do so.
They have been made aware via email, and they continue to distribute it via the download link. The is no need to couch this as a hypothetical scenario.
Morally, it's definitely NOT fine.
It will probably have no significant bad effect on their business, iow, it is fine from a business perspective.
It's unfortunate, but likely true.
So they aren't actually infringing the copyright unless they not only don't provide the source publicly, but also don't provide it on request for at least three years.
b) Convey the object code in, or embodied in, a physical product (including a physical distribution medium), accompanied by a written offer, valid for at least three years
It also would require the written notice which they didn't do.While this is true, it should be noted that we can't know which license will be applied at this point.
Remember that (L)GPL forces you to release your source code under some specific circumstances, and the implied condition here is that you have accepted the license in the first place. If you didn't ever agree to that license, you are clearly violating GPL but otherwise any other restriction of GPL doesn't immediately apply to you; it will have to be resolved in the court. And it is entirely possible that you and original software author(s) can reach an entirely different agreement that doesn't involve GPL at all. So as a user, you can't technically request for source codes right now. (Of course, it still is a not-too-bad strategy for users as original software authors can always demand GPL.)
i.e. The cat is out of the bag.