I wonder what would happen then.
Yeah, who knows? The courts themselves don't know until if and when such a case actually occurs, and even then I'm sure it would get bounced up through the chain of courts and appeals. In such a case where the defendant will be going to jail for embezzling $40 million anyway, would it make much difference if that number was actually found to be $200 million? Or would it make much difference if the defendant stuck to a story that they do not know the seed phrase/wallet password and so cannot reveal the true amount of bitcoin contained?
Anyway, to get somewhat back on topic, the safest wallet for you is going to be the one which protects best against the attack vectors which you deem most likely for you. If you honestly believe those attack vectors are from a three letter agency, then although a hardware wallet or encrypted airgapped wallet might prevent them from accessing your funds, you'll need to go to much greater lengths if you want to hide the existence of those funds altogether.