Is there any way to not send an email to users who were denied?

There is a function that specifically sends the email to the denied user. Adding this code to your site will cause an email to not be sent to any denied users.

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remove_action( 'new_user_approve_deny_user', array( pw_new_user_approve(), 'deny_user' ) );

The Options Addon provides a user interface to not send emails to denied users.

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