MIT asks arXiv to withdraw preprint of paper on AI and scientific discovery

I don't think arXiv should take it down even if it is fraud. ArXiv is more about being a permanent store than a quality judge.

Actually arXiv is moderated and if policies are violated they may even withdraw* a paper themselves, if it wasn't declined to be published in first place. Regarding policies, it's mentioned that a "submission may be declined if the moderators determine it lacks originality, novelty, significance, and/or contains falsified, plagiarized content or serious misrepresentations of data, affiliation, or content."

*Note that this creates a new version lacking any download which also becomes the default but any previous ones are still available.

Suppose that arXiv withdraws it and says the reason is fraud. What if it turns out to not be fraud? Either way, what if the author sues for libel? Why should arXiv spend resources evaluating papers after they've already been published on the arXiv? It's just inviting all the issues stackoverflow and the youtube copyright strike system have.