In that case the seized asset should be given back to the victims. The government has no right to
hold on to it or sell it off for its own benefit.
They can give it back to the right owners; that's if they know who it belongs to or if it's in a case where the owners are clean and can come forward to challenge the government in court and prove they own something in those seized coins. Then they can receive it back, but if they can't do that, then it will come down to selling it in auction, or they will later be left to decide what to do with it.
The US government can't even account for its own bitcoin holdings seized from various sources including Silk Road.
About 150,000 bitcoins are still unaccounted for. They have never provided proof of funds for the missing amount.
The US government hasn't conducted an audit of its gold holdings in over 50 years.
I would not trust them to hold anything of value in a strategic reserve for long. It will eventually get embezzled.