Well the Sipahi gear originally in 1.0 was gear obtained from chests inside the Beastmen strongholds, they were locked and you needed to farm keys for a chance at getting them. Same for Warlock and Sentinel gear. I'd say Lore-wise this gear would be gear stolen from adventurers/city-state soldiers (anyone really) who ventured in and were slain/tempered by the Beastmen. As for where they are now in dungeons, I'd say the same. It's gear from dead adventurers.