Right.

I’ve seen state level officials and FinCEN do stings on unregistered money service businesses, not registering does make trading bitcoin for cash to be a crime. But the IRS wouldnt be investigating that specifically - although they can easily recommend tagging that crime on to an indictment

So it does make it tricky to determine what exactly they were investigating and charged the person with

The IRS could look for money laundering which is the antithesis to catching someone for not reporting income. It is illegal to not report and it is illegal to report illicit source and it is illegal to report a licit source that actually had an illicit origin. The latter is money laundering and a money laundering conviction requires the government to prove that the source was illicit, as simple moving large amounts in a convoluted way is not sufficient for a money laundering charge or even an allegation/probable cause - except in the court of public opinion but who cares about that in money matters, I don’t.