There is no denying that the reason most of the Bitcoin mixers were closed/shut was due to the trace of money laundering activities found on their platform For example Chipmixer the biggest mixer I have ever known closed recently due to the reason but as said by OP its not suitable that is why were seized by governments.
But as far as I know, money laundering in fiat is easy and can be no trace found like we see on the bitcoin ledger still the governments keep complaining that bitcoin is only used for criminal activities.
Here is an interesting fact
The estimated amount of money laundered globally exceeds 2% to 5% of the global GDP, or approximately $800 billion to $2 trillion in just one year.
Let's say 1 Billion happened via mixing what about the remaining 799 Billions? How long the government can blame the cryptocurrency for the incompetence of AML?