It probably can't at current rates of return. That still doesn't mean it will implode and result in a loss of assets. What would've happened if Madoff had returned all deposited funds before his operation failed? Would it have still been considered a Ponzi? Would anyone have known?
it seems to me you are not a mean-spirited human, but you do lack basic and fundamental understanding of this scam and how it works. No one wants to read the 4 or 5 paragraphs here: http://en.wikipedia.org/wiki/Ponzi_scheme
so let me answer your latest question:
1) with Madoff, and every other ponzi scheme operator, to pay this insane interest you need constant new investment.
2) as a function of time, Ponzi owner continues paying the interest and continue taking new investment, with every payment depleting the principle of each investor
3) there is no money making business unit
4) spend money, pay employees, keep some for yourself, keep telling the investors, old and new that you are trading great and making money for everyone, ppl keep investing, total liabilities keep skyrocketing, reserves keep depleting, keep asking for new investment, keep paying, etc. as long as you can. With the Madoff scam it's staggering how long he was able to keep this cycle going. One of his last "investors" was a 95-yr old guy named Carl Shapiro who send Madoff $250M USD during the final months of his scam. By this point Madoff had run out of money by paying his consistent 1% per month interest for years, thus your question "what if he just stopped right before he got caught?" is a little redic. - he had something like $64B in customer funds that were supposed to be on deposit with about $200M in cash by the end. Remember he just had to send a paper statement to his investors each month saying saying "your balance is $x,xxx,xxx.xx" check box yes to constantly re-invest. If this scam had been done with BTC it would have lasted much shorter.