This is literally what the MIT license is for: it lets people take the source code, modify it, and then distribute that. As a paid product even, if that's what you want to do.
This isn't fraud, this is literally MS going "here's the MIT licensed version, and here's our own variant of that, based on obeying that license." And then they go one step further and say "We're not going to tell you that only our product exists, we are explicitly telling you where to get the MIT licensed source code, which isn't even an MIT license requirement".
This is exactly what good open source practices look like.
This isn't fraud, this is literally MS going "here's the MIT licensed version, and here's our own variant of that, based on obeying that license." And then they go one step further and say "We're not going to tell you that only our product exists, we are explicitly telling you where to get the MIT licensed source code, which isn't even an MIT license requirement".
This is exactly what good open source practices look like.