This kind of behavior stifles innovation and attempts to limit what people can do.
I was about to hire a guy and discussing him with the president, it came up that he was into ASICs for crypto mining (years before it was a big thing)... president didn’t like it, figured the guy to be a get rich quick type and through his direction we passed over hiring him.
Turns out in this case, it was a good call, but right or wrong it was enough to push the guy back in the pool as he was already on the edge anyhow.
I can understand the justifications for culture fit, however, to me it sounds like you passed over someone because he was ambitious outside of work. That's fine if that's your culture, but you should consider that as a red flag.