Sorry to see that happen and breakdowns usually occur when you need the unit most. I agree that the steel should probably be 3/8" at that point because a good bit of stress is there. I haven't had any problems with my KB2375. I've worked it hard. I've been in hard dirt and hooked a few roots. With the control lever at full travel, the bucket or arm will just stop moving. I wonder if the swing didn't contribute to this. The swing is very fast and it took a little to get used to by only gently feathering the lever. With a full bucket and the arms extended, the swing can be so fast that really puts a sideways twist on things. Also, as someone suggested, maybe a flaw in the steel. I'm not a metalurgist, but the crackes are at welds. Maybe the weld was cooled to fast which will make the steel harder and more brittle. Either way, I hope Kioti will take notice to this happening and reinforce these areas or use thicker steel. They could have also left a little more steel around the circumference of the hole.
I hope Kioti takes care of the problem and you're up and running soon.