This is true, the main reason for discontinuation of the Chief mascot seems to be cultural appropriation.
A statement from the University, featured in the Chicago Tribune, says, "We acknowledge that we have used imagery to promote our sports programs that is insensitive and misrepresents Native American culture and history. We once thought our use of a Chief mascot and war chants unified our campus. We were wrong. We apologize. We will discontinue the use of all appropriation of Native American culture for our entertainment purposes."
This statement highlights the university's view of the imagery used being misrepresentative and insensitive to Native American culture. The Chicago Tribune is a reputable source, and should be trustworthy.
Another potential contributing factor for the removal of the mascot were the sanctions imposed by the NCAA.
An article from ESPN explains, "For years, American Indians and the NCAA pushed the university to do away with Chief Illiniwek...NCAA sanctions imposed in 2005 barred Illinois from hosting postseason events. Two years later, the university retired the chief."
The sanctions imposed by the NCAA added pressure to remove the Chief, as Illinois was unable to host postseason event which impacted the university's athletics.
https://www.chicagotribune.com/sports/college/ct-illinois-chief-illiniwek-ryan-spt-0827-20170826-column.html
https://www.espn.com/college-sports/story/_/id/15449457/illinois-fighting-illini-look-new-mascot-9-years-chief-end