For reference, the MIT license contains this text: "Permission is hereby granted... to deal in the Software without restriction, including without limitation the rights to use". So the README containing a "Prohibited Use" section definitely creates a conflicting statement.

From my understanding, the code is MIT, but the model isn't? What consitutes a "Software" anyway? Aren't resources like images, sounds and the likes exempt from it (hence, covered by usual copyright unless separately licensed)? If so, in the same vein, an ML model is not part of "Software". By the way, the same prohibition is repeated on the huggingface model card.

The "prohibited uses" section seems to be basically "not to be used for crime", which probably doesn't have much legal weight one way or another.

Good question.

If a license says "you may use this, you are prohibited from using this", and I use it, did I break the license?

Yeah, I don't understand the point of the prohibited use section at all, seems like unnecessary fluff.