I wager way more people did that in its heyday than have a moral objection (rather than an, err, pragmatic one) to custodial wallets. Further, copyright infringement tends to be a low priority civil matter, while laundering billions of dollars tends to be a high priority criminal matter.

the laundering of billions of dollars is usually done in, dollars which are totally anonymous rather than a transparent blockchain that transmits all your transactions to the feds.

Only because bitcoin isn't used by anyone. I'm not willing to wait for that to switch.