For encrypted data, I think it will be similar to the situation with other storage providers. If law enforcement searches your computer and discovers that you've uploaded illegal content in encrypted form to S3/GCS/Mega (especially Mega because they make it so easy to upload client-side encrypted data), then law enforcement will order the provider to destroy all copies of the data.
It will be interesting to see what happens if the provider is a Sia host. Law enforcement entities have standard processes for reporting illegal content to Amazon/Google/Mega/etc, and those companies have teams responsible for handling those requests. Casual Sia hosts currently wouldn't know how to handle such a request. The outcome might be that the compliance costs are too big for casual home users, so hosting on Sia becomes a specialized task that only dedicated companies can provide.
Sia's encryption doesn't protect the file hosts, if the uploader posts a link + decryption keys for pirated content to a public file sharing forum.
Does the take down notice go to everyone that hosts a fragment of the file? Who is liable if the uploader can't be traced?
I suppose that would only work if whatever keys the pirate needed to publish to allow the data to be downloaded wouldn't _also_ give the keyholder the ability to delete that data. Otherwise the copyright holder could just issue the command to delete the file themselves. I'm not sure if Sia works that way or not; would be interesting to see.
A complete S3-like service would require a third-party tool on top of Sia. Goobox[1], for example, uses sia as a storage backend and provides an S3-compatible API[2].
In other words, right now - I think if you are interacting with Sia directly you can do whatever you want with the files you have access to. Not 100% sure about that.
[1] - https://goobox.io/
[2] - https://doc.goobox.io/#section/Why-you-should-choose-Goobox-...
[0] - https://siaprime.net/
So if I am busted and my key/etc compromised, it is possible that those hosts are compromised as well.
This says nothing of Sia's implementation, just that encryption itself does nothing to prevent a party from being prosecuted from illegal content.
Though, I feel like you're injecting meaning into my reply. I was replying to your comment about how authorities wouldn't know if content on my computer (a Sia host) was illegal. My point was simply illustrating that encryption by itself does not prevent me from being the host of illegal or illicit content.
[1]: probably not implemented yet.