Here's an interesting question....

[gentlemand]

The FBI moved them to their own wallets.

They'll be auctioned. There are (or were) a lot of people lining up to buy them. No doubt the price will crash anyway because people seem to enjoy a good panic.

[grifferz]

The FBI moved them to their own wallets.

Interesting. I see from:

http://www.fbi.gov/newyork/press-releases/2013/manhattan-u.s.-attorney-announces-seizure-of-additional-28-million-worth-of-bitcoins-belonging-to-ross-william-ulbricht-alleged-owner-and-operator-of-silk-road-website

Through forensic analysis of the computer hardware, federal law enforcement agents recovered a Bitcoin wallet containing approximately 144,336 Bitcoins.

I wonder who exactly within the US government has access to the private keys of the new addresses now.

I also wonder if they could make more at auction than selling them slowly on an exchange site! Obviously trying to sell them all would move the market, question is how much will the market move on news of an auction.

[gentlemand]

There's no way in hell they'd ever dream of using any current exchange. They'd have to pay fees, they're not legitimate enough, there's not enough money on them and any exchange would probably be wiped off the face of the Earth by Anonymous or someone similar.

All the big sales take place miles from an exchange. The large public holders like SecondMarket would have deals with early holders or big time miners to buy directly from them.

The market probably will plunge briefly even though it has absolutely no impact on how it operates. The coins will go into an investor's pocket and be sat on. I'd guess they'd set the auction price by taking a mean across all the exchanges. There's no shortage of people ready to buy them all.

[pozmu]

Logically those coins should be destroyed, but is there any way to prove that they are?

It is possible to "burn" coins by sending them to invalid address, just like CounterParty did.

[amspir]

Logically those coins should be destroyed, but is there any way to prove that they are?

It is possible to "burn" coins by sending them to invalid address, just like CounterParty did.

Why all this talk of "burning" coins?   There's nothing inherently illegal about bitcoin.   It would make as much sense as for the government to burn stacks of US currency seized in a drug bust.

[gentlemand]

If nothing else their sale would certainly put the lid on all that coin validation shit.

[S4VV4S]

Logically those coins should be destroyed, but is there any way to prove that they are?

It is possible to "burn" coins by sending them to invalid address, just like CounterParty did.

Why all this talk of "burning" coins?   There's nothing inherently illegal about bitcoin.   It would make as much sense as for the government to burn stacks of US currency seized in a drug bust.

That is exactly what they should do....

[mktrader]

Seizing those coins were like seizing the property. So those will not be destroyed, but may be sold in like chunks over time.

[leopard2]

Why should they destroy them? They are not illegal, like drugs.

The fact that Falcon wants to buy them should be a lesson to all bears. It means that serious investors believe in BTC.  

[amspir]

That is exactly what they should do....

I'm not following the logic of why a government would want to do this.

[S4VV4S]

That is exactly what they should do....

I'm not following the logic of why a government would want to do this.

I am not saying that they want to do this, I am saying that they should do this.
Just like they "do" with the illegal drugs they seize

It is none the less the biggest part of an illegal act!
It's all about the money right?

[Brangdon]

Logically those coins should be destroyed,

Why? They aren't dangerous, like drugs or guns or alcohol or tobacco. They will probably be auctioned off, as if they were the proceeds of crime, eg like when a drug-dealer's car gets seized.

but is there any way to prove that they are?

Yes. There are three main ways to get rid of unwanted coins:

• Send them in a transaction that has a spending script that always returns false. Technically, consists only of OP_RETURN. This is provable and does exactly what you want.
• Send them in a transaction with zero outputs. This doesn't destroy them, but it distributes them in a more or less random way, to the miner who mines that block. It's better - less deflationary - for the community. We would want to be sure they weren't broadcast in a way that favoured a miner who was connected to the public servant charged with getting rid of them.
• Send them to a nonsense address for which it is unlikely that anyone knows the private key. This isn't quite provable, although if they use an address like 1crimedoesntpaycrimedoesntpayguys and it turns out someone has the private key, they probably deserve the money.

[SherdonIke]

of course there are no proofs that those coins were destroyed

[BunsenBurner]

Logically those coins should be destroyed,

Why? They aren't dangerous, like drugs or guns or alcohol or tobacco. They will probably be auctioned off, as if they were the proceeds of crime, eg like when a drug-dealer's car gets seized.

Exactly, bitcoin is currently treated as a property, and those bitcoin will probably be auctioned off after the case is closed.

[bryant.coleman]

I heard rumors that the FBI has already attempted to sell some of the coins... but they are just rumors. Can't confirm the news.

[BitCoinsLOL]

Logically those coins should be destroyed,

Why? They aren't dangerous, like drugs or guns or alcohol or tobacco. They will probably be auctioned off, as if they were the proceeds of crime, eg like when a drug-dealer's car gets seized.

Exactly, bitcoin is currently treated as a property, and those bitcoin will probably be auctioned off after the case is closed.

 IRS declares BTC a property while FBI holds 80milly makes perfect sense.

[Brangdon]

of course there are no proofs that those coins were destroyed

There are if you use OP_RETURN. Everyone can verify from the block-chain that they became unspendable.

[ensarwyckven]

They will sell the seized Bitcoins off in any number of divided lots at a series of separate public or private auctions.

[ReBoRn]

I heard rumors that the FBI has already attempted to sell some of the coins... but they are just rumors. Can't confirm the news.

I heard that they are doing some work for giving these coins back to community but currently have not confirmed how and when they are doing this

[Bit_Happy]

OK, I know that the SilkRoad case is still under investigation but....

What will happen to all the seized coins after the case is closed?

Logically those coins should be destroyed, but is there any way to prove that they are?

Hopefully a Gov auction, which is better than being dumped on an exchange.