That's really bizarre and I haven't ever heard of this happening. I assume the wraps were approved by Team Soto Karass prior to the opening bell? Video is on FH.
I don't think they have the authority to do that. They can easily fake evidence on the handwraps and claim kagemi cheated.
Nobody in team Karras has the authority to confiscate anything. The protocol would have been to inform the ref and those in authority with the commission at hand for them to confiscate. Maybe they did exactly that, I don't know, but certainly if they themselves took it, that's tampering with evidence.