To answer your specific question: yes, it is legal to use WhatsAPI.
Now for the story, it looks like the initial threats from Whats App to sue WhatsAPI were caused by people using the service for spam, and as such WhatsAPI got a cease and desist letter from WhatsApp lawyer.
From what I could gather on their Github, the came to an arrangement with WhatsApp, and as such they will not sue WhatsApi if they respect their network. So on September 29th, the put back the source code online:
Development to be resumed, let's pretend that nothing was happened.
For a more detailed history of what exactly happened I would suggest to look here.
What that means in the end is that it's up to you to be a good citizen and not abuse the service, otherwise you might end up having your account blocked or worse. But if you don't play the spammer game, from what I see you should be fine.
Note that from what I've seen, Whats App seems to have made changes recently with their password system, and I've seen a few messages in the Github issues saying that they can't connect, so you should take a look at this post from one of the devs.
Remember, don't abuse the system and you'll be fine !
