I have seen people who had a warning before but after the warning is expired, the flagged account status is still there. Now that is a bug or a violation. In the level system article, a warning usually shows "On Hold" instead of "Account Flagged".
If a seller cannot get on with his current account due to it being flagged permanently and can't even create a new, It simply means if any seller had a violation even before 1-2 years, now they are flagged and their freelance career at Fiverr is permanently restricted? due to a violation a long ago? And above all, cannot even start again? It doesn't look good.
What about the Benefits and Tools for Level 0? it isn't mentioned anywhere.