GOD WINS
What if a multi trillion dollar asset transfer is happening under bitcoin and short squeezes, like seen at GameStop?
What if NSA can distinguish illegitimate funds being laundered in bitcoin from honest bitcoin holders?
Would honest bitcoin investors be protected if the bitcoin assets of bad players were seized but retained in the market?
The money is their power and without it, they are powerless.
Even a quantum computer would still take time to crack SHA256, not only but the public and private key both need to be hacked. The wallet ID doesn't directly correspond. It's much harder than you have described.
Bitcoin can and has been seized on multiple occasions, Mt. Gox, Silk Road, etc.
It can be seized in at least two ways; arresting the person and demanding they turn over the wallet and keys or circumventing through the exchanges.