"It's within my rights to inform on you, with the goal of sending you to a prison as a political prisoner, where you will be tortured. As this is legal, it must be acceptable conduct."

"We have the choice of destroying your life and have chosen to only do so if you don't do what we want" is not a virtue, it's blackmail.

They could also choose to just, y'know, not report them to anything full stop, unconditionally, like any reasonable empathic human would.

Legally what you describe is the crime of “blackmail”. You may need to review the legal definition of blackmail. It’s perfectly legal to report someone’s crime. It’s illegal to say/imply “Hey either you do x/y/x or else I will report this crime you did. But if you do that for me then I won’t have to report your crime.”

That’s blackmail and it’s a felony. Whether the things that Daniel Ray said specifically is blackmail or not, obviously I’d need a lawyer or court to tell me. But it’s not a good look at all.