Automatic banning for chat reports should not be a thing.

A group of friends could ban anybody by just coordinating a few reports.
Why is this system even a thing?

This isn't a thing. If you received a moderation action then it was applied by an actual moderator and not automatically.

I think there is. A few people announced that they would report me in chat and sure is, a few seconds later, my account got locked.
Unless there is a rogue moderator moderating in my local language's chat.

Context: There was somebody that was asking "How much is [this item]'s worth?" in Thai language global chat, to which I responded jokingly, "you can sell it to me for 1 bucks"
Then A group of people announced that they would report me and, then seconds later I got banned instantly.

That just sounds like they reported you for something that was a breach of the Code of Conduct, a moderator reviewed the reports, and then performed the appropriate moderation action on your account.

I do not think there are any moderators in my local language's chat in the first place, and I was playing in the midnight when I got banned.

Unless there is indeed a rogue moderator that can speak Thai language that was also active in the midnight.

Their moderation team is active 24/7 and monitors reports from all chat languages. So, yeah.

I think I could actually prove that the system is indeed a thing.
Before I got banned, it seemed like another also got mass reported and banned just moments before me.

The person was trying to whisper to somebody, but accidently typed it in the Global chat instead, and people in global chat said they were reporting that person. After that, that person went silent, presumes banned.
(And yes, in Thai global chat people do report you for that)

I could buy the game again and fake what happened there to bait reports.

Also, Here is a chat log where a bunch people was reporting me for fun
https://drive.google.com/file/d/1hh2xiuMgH636VYikiqJ8C2FspzYgSuBP/view?usp=drive_link
Then after that I instantly got banned