Yeah OpenVSX security is a joke, they also have dumb search algorithm which allows for easy squatting of similar-looking extension names so they show up in search first when you look for official extensions. There were quite a few prominent hacks done that way. I think Microsoft likes OpenVSX situation because it allows them to claim their proprietary VSCode marketplace to be more secure.
Then why even allow employees to use that?
Binance got a pretty expensive lesson if that was the cause for their recent hack
Vscode(ium) extensions are also pretty weak security wise in general. There's little guardrails on what an extension can do.
On publishing, I do see that the MS marketplace has much better typosquatting and rogue publisher protection. It's unclear to me how much better their SAST/scanning is than OpenVSX. Both have something, but both have been fooled many times, and recently.