Personally, I don't see anything wrong with buying bitcoin from somebody you know in real life. You just have to be smart about it. If you can't trust people you know, then how does it make sense to trust random strangers on the internet? Except it's an exchange P2P, you can buy stolen coins without knowing. The case will be even easier if you bought from someone you know, because the authorities can question both of you and dig down to the truth.
If it was online, where you don't know the person, how are you going to point to who you bought it from? ll you have your payment receipt and it's more difficult to locate the person because they have to go through a longer process. Sometimes, authorities that are not very thorough may just charge you with the crime instead of looking for the actual criminal.
Definitely agree with your assertion aside buying bitcoin from decentralized exchanges which is best method or simply doing a P2P transaction on centralized exchanges, the best way outside that is to buy from someone you know, although this carries risk of not losing your privacy but actually endangering yourself because if you’re not the type of person that actually uses new address for new transactions it will be easier for the other person to know how much of bitcoin you have and this can lead to you been Victim of kidnap. But in this OP story above I think the best way will even be with someone you know because they can simply just go to the person when things go wrong. The wrong thing I think happened in this story is that the buyer was simply just too greedy and that’s he bought for lower price when everyone can access exchanges. Ones the price is too juicy there is problem.
The best form of trading still stands out to been anonymous,