What if they acquired the Bitcoin without using illegal means
Probably not possible in this case, but in DeFi where everything is ruled by smart contracts, what would make executing behavior allowed by those contracts illegal.
>>system+(OP)
Laws of USA and pretty much every other country reject the notion that "everything is ruled by smart contracts" and assert that legally, as far as their jurisdiction reaches, their law is the deciding factor. Contracts have their basis in contract law. You certainly can write a paper contract which "allows" some illegal behavior, and executing such a contract would be illegal, no matter what the contract says. The same applies for a "smart" contract.