Honestly, at the end of the day, none of it matters. Personal responsibility does. You have the option to mute everyone in the lobby, you have the option to mute just the toxic people. It is up to you what you want to tolerate. This should not be overlooked. You're punishing a percentage of your player base because people don't want to exercise their right to step away from the toxicity they hate. Instead of muting or blocking the "Toxic" people, they choose to report because they need someone else to do for them what they should be doing themselves.
I agree with a lot of people on here that there are bad eggs. 100%. But I can guarantee that if there was more investigation into these reports you would see the content as poor sports wanting to get revenge for the fact they were just outplayed. Yes Trash talk is apart of any competitive game, not just video games. It just speaks for passion. Does some cross the line? Sure. But a majority is completely harmless and should be brushed off. Many crews and mine have trash talked each other during a fine and then at the end its a GG's for a good fight. We all want good pirates to fight out there and you're chasing them away by telling them they're toxic and muting them.
This is a poor decision and Arena just isn't the same.