If I'm remembering it correctly, the site was allowing MLP art as long as they were tagged correctly to avoid people seeing political stuff they didn't want to see, until some mods decided that wasn't good enough, and started to deleted the ones with Nazis, and one of them even started to harass Shinodage because he uses the OC Luftkrieg, who's a Nazi, in a PM. At that point, some of the mods questioned if what they were doing was right, but the damage was already done, since now that they tried to control what was and wasn't made, members of both sides left, one for them deleting images and the other once they allowed them back on the site. It was a mess.
It did lead to them making their own site, though I think the more popular one is made by the ones who wanted images restricted and doesn't look that good when I checked (it even has an image of someone with a wolf OC as an example of what not to post because "eww furry," which makes them assholes to the owner and artist). It also caused the admins to finish making Furbooru, since they were planning on finishing it but this motivated them to complete it a bit faster.