I find myself confused by this as well, surely people who are sufficiently technically sophisticated to own bitcoin won’t fall for “I’ll send you bitcoin if you send me yours first”?

I assume the victims aren't technically-sophisticated bitcoin owners. I had previously told a family member that I had a little bit of cryptocurrency, and then a few months ago they messaged me asking how to buy some bitcoin. I prodded them a bit, and it turned out that they had seen a scam somewhat like today's. I was able to stop them and explain the scam. Presumably if they hadn't asked me, they might have figured out how to buy some on their own and then sent it to the scammer.

My Uber driver in Sydney told me he was converting all his money into crypto because he thought the FIAT system was gonna crash. He was not technical. Lots of semi tech literate crypto people out there.

That's like the Kennedy-shoe-shine-boy thing. Kid on the street starts asking Papa Kennedy about some hot stocks he heard of and Kennedy realizes everything is wayyy too overheated and pulls out. Market implodes a little while later, and Joe is able to buy up whatever he wants.

Very similar alright. I felt so conflicted listening to him because I knew nothing I would say would change his mind so I just kept quiet. He was a pensioner trying to save to leave something for his progeny. Kind of heart breaking.

receiving bitcoin on a wallet advertised on hacked accounts does not seem like a very effective mode of money laundering, imho

It's reverse money laundering! Take legit money and dirty it by faking a scheme where it was stolen due to a scam.