So from a legal standpoint, you can modify GNU GPLv2 code (I'll just call it GPL from now on) for private use to your heart's content. However, if you "distribute" your code (key phrase here) to anyone, it must be distributed under GPL (or GPL compatible equivalent). You CAN charge for the distribution, but once they have it, they can freely distribute as much as the way.
So the key term here is "distributed" to a member of the public. GPL defines "distribution" very loosely (on purpose). Simply showing them the code (and especially giving them access to a GitHub repo) is considered distribution. The only time code is not considered distributed is if they're an EMPLOYEE (or CURRENT contractor) of a business and the code is privately within the company. A company can require an NDA while the contractor is working for them, but after they leave (or the contract ends), it would be considered "distributed" to the contractor.
In this particular circumstance, these developers were volunteers and not employees. Therefore, the second any of the code was shown/accessible to them, it was "distributed" to them and they could (if they wanted) share it with anyone. This goes for pretty much all shards. GPL prohibits you from using an NDA as a condition of distribution (again with the employee exception). So for this NDA to be enforceable, they would need to be employees. However, Crafting Worlds LLC is headquartered in New Jersey which has very strict labor laws that prohibit businesses from considering volunteers to be "unpaid employees". So he's 100% $#!t out of luck in that department. If he IS paying any of his developers (and word is that one was being paid), he would have to follow all NJ labor laws, issue W2's or 1099's, pay workers comp and unemployment insurance, etc. I can guarantee none of that was followed in this instance.
So, the word to the wise is, if you don't want anyone to have your shard's code, you would need your contributors to have 0 access to your code and they would just send you stuff. Unless you employ them, you can't prevent them from distributing anything you send them! Your "copyright" does not apply to modifications to GPL code, except when kept privately. Code developed under different licenses may be different, but that's the reality here.
That being said, most people are here for the great community that's willing and happy to share all their cool stuff and ideas! Keep being the awesome community you are and let those who don't share in that spirit go their own way (likely downward).