Earlier quoted context omitted.
The options presented are 1) segregate them into a separate pool, as suggested. They can then still give you money, the arms race is short circuited, and they don't impact the enjoyment of other players. 2) You ban them.
And then they possibly create an account and tread more carefully next time so they don’t lose their skins. This is behavior you can even see in streamers that get banned. Frankly I think a zero tolerance approach to cheating makes sense and sends a more serious message. It still looks bad if cheaters exist even to other cheaters, for example a shadowbanned streamer, and makes it harder to take your game seriously.
Trying to keep someone banned is much much harder problem than finding them to ban in the first place.