Hi Susan, thanks for making this question. Kopi Luwak has gone from an eccentric fad to shady business in the past few years.
In the early days of Kopi Luwak, civets provided unique processing through their digestive enzymes. Additionally, wild civets picked the ripest and sweetest coffee cherries.
Although I'm not fond of kopi luwak, I wouldn't claim that it isn't ethical if free, wild animals processed it. The thing is that according to most sources and researchers, several companies have flooded the market with fake kopi luwak.
Fake kopi luwak is regular coffee, chemically processed to emulate the low bitterness and peculiar aromatic profile of kopi luwak. Although it seems that counterfeit kopi luwak isn't a health hazard, it's a fraud that exploits the massive gap between the high demand for kopi luwak and its consistently low offering.
Besides fake kopi luwak, many producers use cruel practices to obtain kopi luwak from captive civets. According to reports from the BBC and other media, researchers found that producers keep civets in tiny cages and feed them exclusively with coffee cherries.
The poor living conditions of civets produce an inferior quality product and harm the well-being of wild animals.
Considering all the above, kopi luwak tends to be unethical. It certainly needs more traceability to assure that it's appropriately handled for both its authenticity and cruelty-free status.