I don't think that the donations are the real issue here. It's the fact is that he used other people's work without giving them credit. Leaving legality aside, that's just something you never do if you think of yourself as an "artist."
If you use someone else's work, even if it IS a note-for-note MIDI file of a video game song, you have to give that person credit, because sequencing something by ear is not easy. It takes a lot of time to recreate something note-for-note just by listening to it. I do it all the time when I remix; I have a song playing and I'm constantly repeating two or three bars of music just to separate all of the parts.
This guy talks about the MIDIs like they're nothing special; something to the effect of "last time I checked, koji wrote those songs." He fails to recognize that sequencing a MIDI is hard work for other people. The irony is that he can't do it himself by ear, so he turns to those MIDI files for guidance.
I feel bad for the artists he ripped; this guy won't own up to what he did publicly, and he won't give credit where credit is due.
It's pretty despicable.