From an accounting perspective in this hypothetical scenario I believe that you would not be legally allowed to dip into the deposit money save for that recovered through bans. Which creates very perverse incentives.

Landlords are allowed to place received security deposits into interest bearing accounts.

Where I live they owe interest to the tenants on deposits.

Correct. And they get that interest by placing it in an interest bearing account.

I suppose you could take the deposits and earn interest on them as a possible supplemental revenue stream.

Not trying to go there but this very clearly sounds like a staking system