Coming from MTB, there might be parallels to the tinkering solution called "Shigura" which describes Shimano brake levers paired with Magura calipers. The problem is that the calipers need much more oil volume than the shimano ones (and compounding that, Magura has 2.0mm brake rotors compared Shimano's 1.8mm), so the reservoir in the levers is too small. So if you use a Shimano rotor and the brake pads (or/and disc) are worn, you are getting to the point that you can no longer build up pressure, because you run out of oil. The tinkerers running this combo normally are aware of this and often bleed the brake at like half-pad-wear (actually overfilling the brake - resetting it like this would pop the reservoir) to not run out of braking juice. So yes, too small a reservoir can lead to brake failure.
That said, I agree that both brakes failing at the same time is still strange. It might be that one brake stopped working properly, leading to the rider compensating and overusing the other one and actually boiling the liquid or destroying/glazing the pads. But that's pure speculation.
At any rate, any trustworthy company would launch a serious investigation after something like this happened. On the other hand, in days of social media and viral stories destroying companies/lives with little regard for truth, I can somewhat understand Magene's "official" reaction to not react in any way that could construed as an admission of guilt. If this happened with Shimano and Sram groupset, they wouldn't react with "Yeah, might be our fault". How long did it take Shimano to admit their cranks were falling apart? I would expect that internally, they are looking into this really carefully, but maybe I'm just naive. Time will tell.