Yeah they hate privacy for sure... but there is no law against making your coins private. Say swapping to xmr and back. So I dont get what they can do from a criminal law standpoint, they need evidence you did something wrong right? If they have nothing because it's just bitcoin that showed up some time ago from an xmr swap, it's just a new fresh bitcoin, and if it sat for years and suddenly goes to an exchange. Like they can suspect maybe you did something wrong but what can they do about it unless they crack xmr itself?
The only thing i can think of is maybe them wondering if you paid taxes on the swap when you swapped from xmr to bitcoin but guess what, you only have to report anything if you made a profit. no cap gains taxes on losses. So just convert during a bear market.
As I told you in a previous message, the answer will depend a lot on where you live and how inquisitorial the IRS or the Treasury Department of your country is.
The only thing to remember is that Al Capone got locked up for tax evasion. It wasn't Bitcoin, but all they could prove was that he had a lot more money than he could justify.
Are there any known cases of anyone getting in legal issues from crypto because they kept their coins private?
If we are talking about high amounts, there will be. Remember that the greater the amount, the greater the problem. Having $2K in cash of undeclared origin is not a problem, but having $2M in either cash or Bitcoin of dubious origin can land you in jail. I would take action long before the amount gets higher, rather than having plausible deniability as the only plan.