I always though switch emulation got too good too fast. Switch being such weak hardware you can emulate it on a potato. Nintendo must've been eyeing an angle to close Ryujinx for a while now.
It would be very interesting if the main dev actually got paid to delete everything. Although it looks like a "dick move" at first, if you know the source will live on and you get retirement money. I would be very pressed to accept if in that situation. Much more likely they just offered to not sue him to oblivion.
I honestly don't blame Nintendo for angling emulators with everything they have while the hardware is current. They have much shittier behaviour when interacting with the community, like suing tournaments that used mods and threatening others.
I'm wondering if the anticipated Switch 2 is going to be very similar to the current device in terms of architecture and OS, and the real concern of Nintendo isn't Switch 1 piracy right now, it's that the current Switch emulators could evolve into Switch 2 emulators in the early months/years of the new hardware lifecycle, emulators able to play ripped Switch 2 games well before anyone figures out how to mod the new hardware to enable piracy.
But they probably also want to re-sell us previous games, too, particularly if they can run 'remastered' versions of the Switch Zelda games at a better resolution/framerate on the new hardware - which you can already to via emulation...