The answer is it depends. Technically it is against the rules and regulations Microsoft Xbox Live to play using a modded controller. However, there is no way to detect and identify a player who is currently using one. So, if you want to use one safely, make sure that you don't go around forums or in the social media posting a picture or telling everyone about your modded controller. It is also not advisable to message someone on Xbox that you are using one. Remember, Xbox cannot ban you if there is no proof that you are using one.