Yes, it goes both ways but people always focus on monero's crime use which by the way indirectly hardens the protocol. Most people don't like to say it but it's the truth. The world's highest ranking agencies and billion dollar companies like chanalysis cannot break it, which means it actually works and the reason those actors wanna crack monero is because of some "illicit" usage.
It's an indirect audit being conducted all the time. The best chainanalysis could come up with was running malicious nodes to deanonymize users.
It does go both ways, but the ratio of legitimate to ilegitimate use is important, with banks and law enforcement it's like one in a million. With crypto, crime represents more than half of usage by mcap.
You are missing the entire point. The money itself is fake and artificially generated at will by these authorities. Monero and any major coin has actual value because you can't just create out of thin air. Fiat is on it's edge. Look at monero's price, it's growing at record breaking point. Why? People realize it's true value and anonymity/privacy aspects.