Except it’s not quite! If you freeze vulnerable spend paths then you can allow coins which were stored in wallets with seed phrases to be recovered. You cannot otherwise.
Discussion
IOW, you can allow (probably) a good majority of (not-lost) funds to be recovered, but *only* if you freeze other spend paths!
Freezing vulnerable spend paths is an interesting attack vector. It’s a complex issue in Bitcoin, for sure.
So you want to steal coins for the greater good.