Most tech startups will be Delaware. And a lot comes down to the definition of "own" which is ambiguous especially as a C-Corp. One may not be CEO, but can be a H1B Co-founder with a non-trivial (for some amount of non-trivial) number of shares. The O-1 far as I can tell allows for startups, and there may be other visa types which I am unaware of.
Really, I am just saying that the statement "you need a GC to own a business" is far too broad a claim to be true.
Whether he did really have valid work permits, or not, I have no idea. You seem knowledgeable. But I am just generally mildly frustrated by people online jumping to conclusions assuming malice or criminal intent, while knowing nothing about the US immigration process. It is not surprising that people don't know how US immigration works. Why would one need to unless it is something you have to work with? There are so many misunderstands about H1B, GC, etc.
I do agree that really that the core issue is not with this one particular case, but broadly a pattern of how people are treated, and a failure of due process. People make mistakes. Governments are made up of people who also make mistakes. Process is how you catch mistakes and minimize its occurrence. A failure of due process reduces trust that even fully legal aboveboard immigrants will be treated reasonably and fairly. And that is reducing my confidence that I will be staying in this country long term.