With how many coins he has, I would not be surprised if he bought from Mike directly back in the day. Confiscating the "stolen" BTC fcrom someone who received it in an entirely legal transaction would seem unlikely, particularly if they also seized the item purchased with the BTC -- that's double dipping  .

As far as anyone knows, all the physical BTC he had was seized, and its looking like the government decided to peel which I think makes sense in this case as they have a liquidation timeline. I do wonder what they are doing with the spent coins- maybe keepsakes for the agents, maybe returned to Zhong as 'empty' (unlikely), or auctioned off?