It's part of ToS you can lose your account at any time for any reason. And it's their first rule.
And yet, that rule is stupid. But your logic instagram could just give @kyliejenner to some random person, and you think she would have no recourse? You think it would be acceptable for someone at instagram to do Kylie Jenner a personal favor and give her `@kylie`, and the person who currently has it should have no recourse? Kylie is just an example person with a larger following; I'm not implying that this happened,…
Banks' baseline behavior is ruled by law and national banking regulations, not just some ToS. That's probably why paypal and similar are in no rush to become real banking institutions.