As far as I'm aware, YC didn't cut ties with him. Rather, YC restructured their advisor program and he was offered a role in the new structure, which many other advisors did, but he declined for whatever reason.
Of course if you were YC trying to save face for everyone involved that's also exactly what you would do.. but I think it is ill-advised to jump to conclusions before the facts are in. It might be just what it is claimed to be: a choice by Pieter Thiel not to participate further for whatever reasons he might have. Certainly YC of today is not the same as the YC he originally involved himself with.
Of course if you were YC trying to save face for everyone involved that's also exactly what you would do.. but I think it is ill-advised to jump to conclusions before the facts are in. It might be just what it is claimed to be: a choice by Pieter Thiel not to participate further for whatever reasons he might have. Certainly YC of today is not the same as the YC he originally involved himself with.