It's the government trying to enforce their opinion of who should own those Bitcoins, thereby taking power away from the owner that the network has decided on, which would be "whoever has the cryptographic keys".
In reality, crypto's true purpose is a moving target, so it can never be criticized because that's not what crypto is really about.
Bitcoin is a tool. Like hammer or a shotgun. You can use it whatever way you want. There is no centrally defined "purpose".
Any infrastructure has a purpose. It’s fair to ask why Bitcoin exists and whose project it is.
Hint: Millions of people use Bitcoin as a:
- store of value to protect purchasing power over time
- inflation hedge to protect savings from the ravages of inflation
- a hedge to protect against corrupt governments manipulating currency
- protection from negative real interest rates
- censorship-resistant payments
- anonymous payments with instant finality (Lightning)
Money is a tool like any other. Cash, gold, NFTs, Bitcoin, and credit cards can be used for good or evil, lawful or unlawful purposes. The technology isn't inherently moral or immoral. It is just a tool.
The "it's really for nazis" argument is particularly weak. The critics must be getting desperate.