I said that for 2 reasons. Firstly, players in an online game should are not school kids. Players should be allowed to do or say things that isn't always right. Mild insults/ toxic behaviour should not encouraged, but players should not be banned because of this. Imagine your government starts putting impolite citizens to jail.
But more importantly, it is hard to define what kind of speech is "racism, insults, toxic" and what isn't. Who could define the definition of racism? Saying corona virus comes from China could trigger many Chinese as they see this as racism.
If we easily ban players under the name of racism, toxic, it will lead to endless conflicts among the community (admin abuse, players disagree with admin decision etc). Internet is not a utopian. People should stay from the internet if they cannot deal with hostility.
Those speech should not be encouraged, but we should not ban them.