Yes because they are not going to leave the game
Some people don't leave, but certainly some do leave. They lost all their stuff. You get the same thing if someone loses all their save files in a single player game, except much worse since real money was often involved and there is no unresolved story to tempt the player. Some just never pick the game back up because they don't want to go through all that progress again. Those that do come back come back with the knowledge that they'll be sent right back to start with nothing if they follow the same behavior that got them banned last time.
when someone has something like money invested into something and it is taken away for ever it creates anger then they start to troll or smurf because they are mad and want to make other people mad and hate the game.
And they just keep that up forever? So you believe that every perma-banned player will then further choose to waste their own time accomplishing nothing?
So make it where a player can only have 1 account by linking a i.d to it stack time on bans pretty sure korea has something in place so they only have 1 account.
You can't implement an ID system for all locations, too much push back because people don't want to give companies their personal information.