In the end Riot decides what is allowed and what isnt allowed so they set up the enviroment we are playing in. They decide how to handle things like flaming, griefing, trolling, botting, smurfing for over a decade now in this game. The behaviour against Phreak and how many people clearly cross the line there, the new player expierience, the overall plaing experience, the size of the player base are all the result of their actions. It is allowed way to much, punished way to less/not and now Riot is like surprised Pikachu. This also leads to the fact that not a lot of new players stick with the game and a lot of people quitted the game for those reason. Which I think is hurting the game and their income long term way harder than punishing/banning these people. In my opinion taking harder actions against griefing/feeding/trolling and not allowing botting or smurfing would have created a less toxic enviroment with a way better playing experience for new and old players and would have lead to a bigger playerbase.
No, players being toxic is not their fault. The size of the playerbase is not directly tied with them, these are things that influence, not dictate.
Yes, they can do better to combat these things, but no, the action itself is not their fault.