>if it ends up in a number of smaller BTC wallets, you also have to now prove that those wallets are all owned by the same person and not just a bunch of wallets owned by seperate people who happened to have a total of x amount of BTC adding up to roughly the equivalent value in ETH minus transaction fees.

This could be considered handling stolen goods, and could be prosectuable. Anyone who has access to the private keys that have been involved could potentially be considered an accessory (provided they have spent them and not reported the transaction).