It was reported today that the US government shut down the web site Silk Road, where people bought and sold things (allegedly including illegal drugs) using Bitcoins. The operator was arrested, and BTC 26000 was seized. (Source: New York Times).
A few months ago, it was also reported that the US Drug Enforcement Agency seized BTC 11.02 from a person suspected of buying or selling illegal drugs.
Is anything known about what the US government (or any other government) does with seized coins?
Sell them on an exchange for USD, and turn the proceeds over to the Treasury
Sell them at public auction, as is commonly done with other seized property
Use them in future sting operations
Do not return them to circulation, but hold them indefinitely
Destroy them by transferring them to an address with no private key