User has been Auto deleted - all data lost

Bottom line, the result is catastrophic for those affected. But it is still important to understand what happened because we need to know how technology works and what are its limitations.

I do not have the technical expertise of most in the community. The explanations that I have seen so far don't explain on my level what happened, but I can make some layman inferences.

Something as yet not explained and/or not shared (and there may be good reasons for that) messed with the NETGEAR server(s) that store ReadyCLOUD user credentials. ReadyCLOUD user credentials became unregistered from the NETGEAR server over the web. This probably caused the ReadyCLOUD app under the Cloud tab of the Admin Page to toggle from ON to OFF when the registered credentials were no longer avaiable. As a result, any ReadyCLOUD users (cloud users, not local users or local user folders) were deleted from the NAS by the ReadyCLOUD app. Whenever a ReadyCLOUD user is deleted, the OS is programmed automatically to delete the associated ReadyCLOUD user's home folder. 

This OS behavior of automatically deleting cloud user home folders (not to be confused with the ultimate, unforeseen cause of the current problem) has come up before in the context of NAS device registration of cloud accounts related to the switch to MyNETGEAR (for me from using ReadyNAS Remote to using ReadyCLOUD). After dealing with that, I used ReadyCLOUD for remote access only, but did not store anything in the cloud user's home folder as Sandshark is currently recommending.

In connection with this incident, there has been no external intrusion into our NASes. The problem was an interference of some kind with ReadyCLOUD user credentials stored on the web, which removed the user from the local instance of the ReadyCLOUD app and triggered an automatic home folder deletion programmed into the OS running on the NASes. There are some advantages in certain situations to this behavior—for example, if a subsidiary cloud user wants to delete an account and the associated home folder from the NAS. In hindsight, maybe the automatic deletion feature should be something an admin opts into rather than being the default.