93% of funds seized by IRS Criminal Investigations in 2021 were in crypto

Day trading crypto isn't just a quick way to lose money, it's also a quick way to make accounting for taxes extremely tedious.

It really depends. There's chain analysis software that makes this straightforward depending on the type of day trading you do.

How does this work? Do they just get private keys somehow?

The government says "give us the password or you're going to jail for life".

It's indirect contempt of court [1] to disobey a court order to hand over the money you owe, and you can be jailed for it.

Cash is much safer for criminal activity