So in theory if someone buys BTC through P2P and stores it in their non custodial or cold wallet, an agent of the United Kingdom law could simply knock on the buyer's door and demand to have full access to such wallet because some satoshis are suspected to be of an illegal procedence?
Crazy if that is the case, because one thing is to seize a Binance or Coinbase account because it being used illegally, but a completely different thing is to ask some citizen to hand over their Ledger or Trezor because that person alledgely bought a handful of bucks which had interactions with a labeled addresses or addresses being recorded in a black list ...
Bascially yes, and something similar has happened to one of the members from our local board, as he explained it
here.
You can use Google translate to read the whole story, but in short he bought large amount of bitcoin and after few years German police knocked on his door claiming that that those bitcoins were "dirty" and seized his Ledger with shit load of money on it (only stablecoins, not bitcoin).
