No you don't seem to understand how it actually works. Unless the company's backend was compromised, which it wasn't (if it had been, this wouldn't even be an issue and chances are there would be more then just this thread about it. Major news sites would be covering it), you are solely responsible for what happens with that account. It doesn't matter where you where when it happen its your problem.

You're just gonna waste more money and time by trying to do this.

I disagree, I just want to prove a point. Anybody else's negative opinion really does not matter to me.

Just wanted to let you guys know that I am fed up with Microsoft and Xbox Live. I am preparing to get a lawyer and sue them for loss of money and time from their services for a compromise in account security. This compromise led to a permanent suspension, to which I could not control. I will let you guys know the status of the case as it goes.

K. Consequences of Violations.

If you violate the Code of Conduct or the Xbox Live Terms of Use, action(s) may be taken against your account and/or console, including but not limited to the following:

Some offenses warrant an immediate permanent suspension, including without limitation: hacking, modding, profile tampering, fraud, marketplace theft, buying/selling/theft of gamertags/accounts, severe racial remarks, impersonation of Xbox staff, nudity on the Xbox Live Vision camera or Kinect sensor, repeated creation of inappropriate gamertags or profile content, posting viruses, or URLs to phishing sites, malware, or viruses.
Trying to avoid a suspension by creating alternate new accounts may result in a permanent suspension of the new user account and a possible escalation of punishment to the original account and all related accounts, and any device you are using to connect to the service.
Repeated violations of the Code of Conduct may result in a permanent suspension of your account, or a permanent ban of any device you are using to connect to the service.
If you create a gamertag that has been determined to violate the Terms of Use or Code of Conduct, you will be required to change it.
If you create content in violation of the Terms of Use or Code of Conduct on Live, we may delete it and a suspension will be issued.
If you are abusing the voice or message features, your ability to use the voice and messaging system will be suspended.
Microsoft is not obligated to send you a warning before these actions occur. If your account is suspended while participating in a tournament or competition Microsoft assumes no liability in the loss of any potential prizes or recognition related to the tournament or competition. Microsoft is not obligated to monitor every post or activity, but we have the right to remove any post or take action against any user.

Microsoft reserves the right to remove at any time, without notice, any user-created content from the Services. Microsoft reserves the right to immediately terminate or suspend a user for violations. Microsoft can contact any Internet Service Provider and provide the ISP with information on illegal activities.

UPON RECEIVING A PERMANENT SUSPENSION ALL CONTENT LICENSES, GOLD MEMBERSHIP TIME, AND MICROSOFT POINTS ASSOCIATED WITH THE SUSPENDED ACCOUNT ARE FORFEIT.

Here's how to fix:

1. Trade in your Xbox

2. Buy either a PS3 or PS4.