What kind of effect will this have on the Bitcoin economy? Holding so many coins give them immense power over the entire Bitcoin economy, as they're able to rash the market whenever they decide to pull the trigger. Has anyone pondered what would happen to the bitcoin economy once the Ulbricht trial is over, and the coins are liquidated?
They won't sell them on the exchange. It will be auctioned off like other forfeited property. If you want to participate you will wire earnest money to the US treasury in advance.
You don't really think the sovereign nation of the United States is going to transfer >$200 million worth of coins to some place like BTC-e just so the operator can say "oops we got hacked" and retire the next day do you?
Yes, they will auction them off, as D&T describes.
If the auction is well-advertised and transparent, I predict the bitcoins sell for *greater* than the prevailing market price at the time. People on this forum worry about large sellers crashing the price. But remember, large buyers wanting to get in have the opposite worry (rallying the price too high before they've established their position). This auction would be a good opportunity for wealthy individuals or funds to establish a large position without slippage.