This is the HODLing. Fed is a good Hodler. By the way, I have a good question, did Coinbase asked FED to upload KYC documents and prove the source of their funds? I think that Coinbase should seize those coins because those are coins collected on darknet, so, they should really seize it but since it's Fed and the government is involved, every kind of illegal money is okay for them to exchange and sell on people.
If anything, those coins should be burnt, not exchanged!
The FED does not hold BTC, but the US government does. They are not selling all of their BTC at once, but rather in smaller amounts to maximize the revenue for the federal budget.
Coinbase is only freezing "dirty" BTC in accordance with legal requirements. When the US government wants to sell BTC, these BTC will be considered legal and their history may be "washed clean" to make buyers feel more secure when storing and moving them in the future.
I do not hope that these BTC will be burned, they are beneficial to the US government and will make the US government want to support the development of the crypto market.