At the end of YYH manga where it was revealed that reikai was brainwashing demons to attack humans, Yusuke wondered if he caught any that were victims of reikai's corruption under Enma. I'm pretty sure this was the case with the Saint Beasts.
The Saint Beasts are based on 4 guardian spirits of the 4 cardinal directions. They were actually worshipped as gods or benefactors in mythology. (hello Fushigi Yuugi fans, remember Suzaku, the phoenix of the south?) Everyone from Demon City was labeled as "criminal" but we never knew of their crimes. And the only demand of the Saint Beasts from reikai was their freedom as prisoners (which is not wrong because the endgame of YYH is human-youkai coexistence after the incarceration of Enma that Koenma did himself). But because reikai refused and oppressed demons, the Saint Beasts rebelled.
Now, based on mythology, the Saint Beasts should be strong and at least A class if not S class because these are youkai that were worshipped as guardian spirits. For reference, Kurama as a youko or a fox spirit that could be prayed to as well, was A class before getting hunted. And Raizen as a toushin or a war god was upper S class. Saint Beasts could be in between them based on the mythology.
So why were the Saint Beasts demoted to C class? The youkai that reikai were able to hunt and brainwash were probably once high leveled youkai. They caught A class youkai, brainwashed and weakened them to manageable levels and then let out to cause troubles that will justify the barrier for reikai. This could have been Kurama's fate when he was hunted by reikai if he wasn't able to escape as a spirit.
The Saint Beasts could have gotten the peace and coexistence that humans and youkai have at the end of the manga if only Yusuke and his team didn't kill them. It's ironic that Kurama and Hiei's first assignment to help Yusuke and Kuwabara to get pardoned as criminals was one of the times they were probably condemning the wrong people because of reikai's corrupted manipulation under Enma's rule.
Edit: To make this meta more on point, think about where the Worm Whistle could have come from. It's the weapon that Suzaku used to turn humans into brainwashed zombies. Hiei mentioned that he's only interested in the tools and treasures the Saint Beasts stole but never mentioned what those were. So did the Worm Whistle come from reikai? This was never clear in the story but the Worm Whistle functions like the Demon Sword that Hiei used. They both transformed humans. If the Worm Whistle is an artifact from reikai, why the hell does reikai have not one but two artifacts that were harmful to humans? And how did Suzaku manage to get something like that if the youkai of the Demon City could not escape from there? Reikai could have given the Saint Beasts a weapon to manipulate them into being a threat to ningenkai. If the arc about reikai's corruption was fleshed out in the manga, Koenma's investigation could involve how many artifacts reikai possesses that are threats to humanity which somehow end up in youkai hands.
