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Isn't this because of the kimwolf (and now 6+ other botnets) that are taking advantage of people running residential proxyware unknowingly on the device which permits outbound connections to 127.0.0.1 on tcp/5555 to auth in and exec wgets or drops a loader that grabs the ddos malware APKs and install it?
It seems to require the user to:

1. Enable Developer Mode by going to an obscure settings page and tapping the build number seven times

2. Enable USB ADB debugging in the Developer Options

3. Establish an actual USB ADB session

4. Enable TCP/IP ADB debugging in the Developer Options

5. Unknowingly download a malware app from the official Play Store

6. Blindly click "Yes" on the permission prompt.

In other words: this is all but impossible to impact regular users, and it requires a particularly careless developer to be hit by it. And it only works if the Play Store is useless at preventing malware in the first place - but I thought their excellent app scanning was the entire reasoning behind all-but-banning 3rd-party app stores and sideloading???

It is "for safety" in the same sense that governments banning all encryption is to "protect the children" or to "prevent terrorism": flawed justification invented to distract from the real reason they want it.

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You haven't been able to connect to an android device on port 5555 for yeeears. Every time you enable adb/IP it generates a new random port, or you need to use the QR/PIN pairing thing. On top of needing to enable developer options, adb/IP, confirm the fingerprint.
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Hadn't thought about that additional attack vector those proxies are enabling. In addition to "internet access from residental connection" privileges, the attacker also gets access to loopback on the device that does the proxying...

But even then, shouldn't this show the same permission prompt for the user that anything else trying to connect to port 5555 would?

Yes, but users are told to allow it if they want to get free coins etc.
You can't fully protect people from the risk of taking bad advice from malicious strangers.

Not the least because most of our industry relies on it to make money. Marketing and advertising themselves are institutionalized forms of "do this thing that's actually harmful to you to get free coins / be safe / get laid".

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