The govt confiscated 174k BTC, but he supposedly has another (encrypted) ~500k BTC wallet
If he does I'd be very surprised if he can ever spend it, even if he does somehow get to a copy. Torture is not the only or most effective avenue to thwart encryption or your plans to keep money from them, they could claim enough back-taxes to bankrupt you, repossess anything you buy etc, etc.
Of course an oppressive government has many options to attack an individual, but Bitcoin enables individuals to protect themselves. For example a political refugee can flee his country with bitcoins in his head (brainwallet) which would be a lot safer than fleeing with cash in his pockets.
You also have scenarios that are not as drastic, where the adversary is not a government but, for example, a powerful (ex-)spouse trying to seize some of the assets in illegal ways during a divorce going wrong. Etc.
Your refusal to acknowledge this usefulness of Bitcoin makes your criticism look weak and one-sided.
If he does I'd be very surprised if he can ever spend it, even if he does somehow get to a copy. Torture is not the only or most effective avenue to thwart encryption or your plans to keep money from them, they could claim enough back-taxes to bankrupt you, repossess anything you buy etc, etc.