They don't forget - they simply don't care.

The government don't care in the slightest when banks launder literally trillions of dollars. They get a completely meaningless token fine and that's it. No arrests, no criminal charges, no seizures, no shutdowns, and allowed to continue to launder more money in the future. This is all fine because the banks bribe our politicians and freely hand over all your data to the government when they want it. But when a piece of open source code allows the average person to maintain some semblance of privacy against the government's various mass surveillance programs, then all hell breaks loose and they absolutely must prosecute someone. They don't actually care if the people they prosecute are actually guilty, as long as the set an example to the rest of us that you should be good little citizens and never step out of line. This is not about preventing money laundering in the slightest - if it was, they would clamp down on the banks which do it constantly. It's about surveilling and controlling the populace.

Absolutely. We already have dozens of blockchain analysis companies out there. My point was that if everyone who used bitcoin stopped using things like centralized exchanges or wallets like Wasabi or Trezor which all directly fund these blockchain analysis companies, then that would cut off a large part of their funding and many would cease to exist (not to mention making general blockchain analysis much more difficult since you would no longer have KYC linked addresses and such).

It's pretty damning just how desperate Chainalysis are to not let anyone who even remotely understands bitcoin view their code.