I am uneasy about this situation, but the car wash in question is more like the car painting shop in Grand Theft Auto. Even if painting cars is a legitimate activity, when 75% of your customers are trying to mask illegal activity you should be doing some due diligence to ensure that you're not enabling illegal activity.
I'm not totally okay with what happened here, but I'm confident that it was not a "oops, sorry, we'll ban that botnet" situation. no-ip's primary use case is botnets, and they do have a responsibility to minimize botnet use. They can't claim ignorance given the widespread use.