Microsofts efforts to combat piracy, and has banned as many as 1,000,000 users.
However not everyone who was banned was pirating games, regardless of whether you modify your xbox to play blackups, or just modify it to look cooler, perform better, or last longer, these actions are against the terms of service agreement that you accept when prompted to on the Xbox Live login.
If the warranty seal is broken on your xbox 360 you are in violation of TOS and will be banned from Xbox Live if this is discovered.