Didn’t they throw away the keys to the smart contract a long time ago?

If they did that probably doesn't matter.

"I built a bomb I can't disarm" is not a credible defense.

It'll be especially nasty if they profited from the service after throwing away the keys and "learning" of the money laundering going on there.

Walking away a year or two ago would argueably have helped them.

Exactly. I understand the sentiment that people are sharing around, "They're just being arrested for writing code!", but intent matters. And it seems like, in this case, there may have actually been intent to develop this to assist with illegal activities.