Almost - not newline encoding, but treated as text, and therefore corrupted.
EF BF BD is the UTF-8 byte sequence for ‘REPLACEMENT CHARACTER’ (U+FFFD). This is indicative of a file being treated as text instead of binary.
A JPEG image starts with ff d8 ff e0 xx xx 4a 46 49 46 00
You can see that the first four bytes have each been replaced with EF BF BD.
So your images are indeed corrupted. This is not a problem with the importer, this is a problem with the database, as @pfaffman already said. If you have copied this database from another server, you might want to check if this is already an issue in the original database. This could also only be happening on the oldest images (if this happened a long time ago). Just remove the exit line and see what happens.