Why on earth would they do that? Under US law, law enforcement agencies can keep a portion of the proceeds from the sale of any goods they legally seize. This is a massive windfall for them.
> In most cases, the Department [of Justice] does not liquidate seized or forfeited AECs, as doing so allows them to re-enter the stream of commerce for potential future criminal use.
So note: if the DoJ auctions these off, it's "good for Bitcoin", as it provides further confirmation they consider them a normal form of property whose legal uses outweight any illegal uses.
On the other hand, if they refuse to auction them off, it's also "good for Bitcoin", as it permanently reduces the circulating supply, making all other units incrementally more dear.
Though it's unclear still what Bitcoin's principle role is. If it's more an asset, then yes, destroying coins is a benefit to current holders.
> re-enter the stream of commerce for potential future criminal use.
Because of course if CASH re-enters the steam of commerce is somehow different?
For example, what if we assume for a moment that this makes sense from a crime-fighting perspective. That is, the marginal value of future-crime prevented by withholding the cryptocurrency is greater than the value of the crime-fighting that could be financed if it were auctioned off.
If true, it would also follow that the DoJ should be buying cryptocurrency on the open market to keep it idle, at least until its price rises such that an equilibrium is reached, where "withhold-from-stream-of-commerce-value" and "spend-on-crime-fighting-value" become roughly equal.