iCloud device's name has changed - Stolen iPod touch

I've lost my iPod touch over 12 months ago.

I Immediately locked it through Find My Iphone on iCloud.

I was never able to locate as it always looks off.

About 6 months I received an email that a sound was played on the device...but I logged in too late and the device was still off.

Now, just the other day I checked through Find My iPhone and apparently the device has changed its name to iPod "of ---".

I did change my iCloud and Apple ID password several times in the past 12 months.

I've activated the 2-step authentication a while ago.

How is it possible that they were able to change the device's name?

Should I just erase the device or still holding on and trying to locate it once they go online?

Thank you.