Def a poorly designed lipo case.
I've never been a fan of lipo's with cables coming out of them like that myself, and that is something that is generally typical of the cheaper brands.
As for lipos failing due to puncturing/mechanical failure...I've seen a hard case lipo fail catastrophically as a result of a drive pin coming out of a centre shaft/CVD in a 4wd...and rupturing the cells...
Equally I've seen a few saved by the hard case when the same thing has happened as well...proving that the hard case is a very sensible feature of lipo batteries! I would always prefer hard cased ones personally...although in micro, I do use soft cased ones as there are no hard case ones available for the car/chassis I have.
Annoyingly for you, I suspect here is no easy fix for that pack...unless you can pursuade some heatshrink down over those cables and well inside the case...a very tricky ask without opening the case.
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