It was interesting that the FBI managed to get most of the Bitcoin ransom money back from the Colonial Pipeline hack. How did they do that?

It's very simple. They had the 'keys' to the wallet holding the coin. They got the keys through a KYC exchange (or through the hackers directly, see below). These exchanges must follow laws similar to those of banks. The news reports on this story are INCREDIBLY vague. They don't indicate from which exchange these funds were taken, or, if, by chance, the attackers simply gave back some of the coin as an agreement.

Is that the end of Bitcoin as a thing?

Not at all. It doesn't change a thing.

This article says it was just a case of "sloppy password storage" - but that doesn't make sense for an organization that hacked a key energy supplying company.

I don't even need to read the article because it's very clear what happened. The hackers stored their coin, or put their coin purposely to be found, on an exchange. The US govt can audit and confiscate Bitcoin KYC exchange accounts just like banks. That's what happened here. This is why people recommend that you never leave coin on an exchange.

"Not your keys, not your coin". If your coin is on an exchange, the Man can take it, and that's what happened here. If you store your own coin, the banks, the govt, God, they can all fuck off.

So the question is, why did this happen? Well, didn't the govt only get a little more than 1/2 of the BTC back? Right? It was a deal. The thieves cut a deal. They put up 1/2 the coin and made it look like the Man made a big bust. It's all fucking theater.

Why did the thieves do that? Because they felt the full heat of what they'd done. They shut down the fucking fuel for the entire east coast of the US. They fucked up. They knew they'd overstepped their bounds. Also, by (apparently) selling out BTC, they served the Man's purpose by degrading BTC. The Man doesn't like BTC. So they cut a deal, and they both won. The thieves kept 2 MILLION in BTC, and the Man got headlines causing a 20% drop in BTC. Everyone wins. Again, it's all fucking theater.

If it doesn't have anonymity then there's not much value left.

Hmmm... that must be why BTC is worth 37K USD right now, nearly twice what it was at the height of 2017, and why El Salvador has been the first country to make it a national currency. It's value is just beginning to be understood.