They usually seize it if they can, and after a while organize an auction. If the said BTC has been proven to be used in criminal activity, there's a high chance they'll seize it.

But then you have Bulgaria who owns a massive stash of more than 1% of the existing BTC and hasn't sold/auctioned it yet. These Bitcoins have been seized as well.

Guess each government has their own plan - although the fact that more than 1% of existing BTC is in the hands of Bulgarian government is kinda worrying to say the least.

When police investigate a case, and put one under arrest. After that, police can investigate further and if they can get private key, they can seize bitcoin from that one. It is not always the case will be resolved like that. There are two endings and depends on different cases but as the truth is, police often collects many spy information before arresting someone because of suspicious or fraudulent activities.

It means police mostly can seize illegal bitcoin, not all 100% but significant amount.

Lol, so the government took $48 million dollars and made them $1.1 billion?

The government didn't believe in any cryptocurrency asset especially in Bitcoin and that's why they auctioned it, which happens sometimes in the US marshals service after they confirmed of seizing crypto-asset confiscated from criminals. They usually compared the price into the exchange rate or in Coinsmarket Cap.

Look at this article, US Government Auctioning off Bitcoins Worth $37 Million in 2 Weeks. This year they actioned $37 million on US marshal service which is the Bitcoin was seized come from the criminals. They exchange seized Bitcoin into regulated fiat currency and the government will hold the real money not the virtual/digital currency.

They do an auction and sell them. Selling through auction is the most logical option. In my local, if police seize any vehicles like motor bike or cars and if the owner don't claim their vehicle, later, authority sold them through auction.

Well, it depends on the investigation of the police department.  If those Bitcoin came from scam company and they had successfully traced the owner of the funds, there is a possibility that they will return it to the verified claimant, or if it is from an illegal transaction, they can just seize it and auction it later. 

Going for an auction is the common practice on most of the countries to dispose the seized assets. When it comes to digital assets, conducting an auction is an complicated process.

In one of the post it is mentioned about the country Bulgaria having a large volume of seized bitcoin. Probably Bulgaria will serve to be one among the top list with a big volume of bitcoin reserve over the falling years due to the increasing legalized usage of cryptocurrencies.

this is an important point because in most countries they have not legalized bitcoin because the police take the learned bitcoin and do auction as if it were legal goods? Wouldn't it be easier for them to legalize bitcoin to make everything clearer for everyone? and I also wonder about the moral issue, for example, people who buy the bitcoins stolen in the auctions do not have remorse? because without a doubt they are aware that the bitcoin that will be auctioned by the police was used to commit many crimes, I am of the opinion that the bitcoins learned should be donated to needy people

Confiscating BTC and then auctioning it seem easy to take for a drug dealer.

With how easy it is to learn bitcoin and operate bitcoin wallet, you got to believe these days that police officers know how cryptocurrency works. Some of them probably have already invested in BTC. It's even possible that a corrupt police officer will deliberately target someone who uses BTC for their drug transactions and then confiscate the BTC for himself.  Do you think this had even happen already?

There is no law that explicitly says so but the law is clear that anything related to a crime or to any illegal activity will be confiscated. As a matter of fact, in real life the confiscation far extends to items that are not actually part of the crime.

Normally, while the deliberation of the case is ongoing, the confiscated items will remain stored in a safe place. But when the court has already rendered its guilty verdict or specifically labelled those items to be illegally acquired, then those will become properties of the government. They have the prerogative on what to do with it.

The same is true with confiscated Bitcoins. I guess they have the freedom to either auction it immediately, keep it for a while until a decision is made on what to do with it, or simply convert it to fiat.

But we can only talk of the confiscated Bitcoins. If you have stored some which escaped the investigating eyes of the authorities, then lucky for you.