Bitconnect is at fault, but not for being a Ponzi scheme. They should be punished for what they did. It wasn't a Ponzi scheme because a Ponzi scheme would imply that they are paying supposed "gains" to investors with new investor's money.

The real fault is that they guaranteed the principle of the loans against the US dollar. This was their undoing. During the DDOS attack, gains were made and loans were maturing. The problem was that their value was guaranteed to stay locked against the US dollar until which time the investor took those profits/principles and convert them at the current market price. The problem was no-one could recover them at the current market price. The market was in the midst of one of the worst corrections it has ever had. These payouts were stacking up and becoming more and more expensive to pay.

Imagine if you owed me 50 dollars and I get to choose when you pay me, but you must pay me in bitcoin. You only have so much bitcoin and I say to pay me at the moment the value of bitcoin is driven down drastically. You only have so much bitcoin to begin with. With that system multiplied with many investors, you would run out of bitcoin.

With all these payouts stacking up and the market plummeting, it got too expensive to cover the cost of these payouts. In addition, fear, bad media, cease and desist orders scared off new and returning investors. For 5 days, there were no new customers which magnified the problem.

Ultimately, they should of had some serious capital in reserve to cover the guarantee to hold payouts against the US dollar which was their fatal flaw. They were making money hand-over-fist even with the bonus program, yet they must have been spending it like there was no end. They literally didn't have enough funds to weather 5 days. There was no reserve to protect the investors. For that, they should be nailed to the cross.