If there was really nothing suspicious about the service mentioned in OP, government must not have taken action against them. When something gets out of hand, then it becomes necessary for government to take action and this is what happened in case of chipmixer.
The government can pick any reason out of a hat to seize privacy solutions and that is because the government stand against privacy. You must understand that money laundering and illicit activities are mostly perpetrated by centralized services and their institutions and not so much with BTC or BTC privacy solutions. But they want you to believe their lies, and the more people believe in lies like this, then they wouldn't want to use privacy solutions nor protect their privacy, since they could be accused of crime if they do so.
It is true that Bitcoin mixing is not money laundering, but it can be a tool or instrument to use in money laundering.
Guns are tools that the police use in stopping criminals and protect citizens, but the bad guys also use guns to rob, kill and take hostage, do we then ban guns?