good.  i dont want the US government being a large stakeholder.

Shouldn't they do an auction to get the best price?

Why would they try to get the best price?  This is a government agency, not a business.

Government-seized property is usually sold via auctions.

The US government being the largest holder of bitcoin is kind of a good thing.  That way the US will not ban it.  Think if China had that many bitcoin right now.  We wouldn't be in this mess.  The worse thing that could happen is that the US totally dumps and then bans it. 

They will never sell them on an exchange. They will be sold in an auction, but the person who bought them might. It all depends on who bought them. Whichever way, it is still in the interest of the new owner(s) to keep them off exchanges to maintain a good reference price for his/their assets.

I don't believe that the US government would go down the exchange route for selling such a volume of bitcoins. Private auction(s) would be the likely option, no doubt a number of personnel will take their cut too...

The nice thing about bitcoin is that you can just check for yourself:

http://blockchain.info/address/1F1tAaz5x1HUXrCNLbtMDqcw6o5GNn4xqX?offset=0&filter=0

None of the Silk Road seized coins have been moved.

unfortunately thats not how it works all at.

The US will have zero interest a stable bitcoin even if they own it. They would rather watch every coin they own disappear at zero value if it means bitcoin goes away.

Hypothetically, couldn't the buyer of the BTC just get access/control to the coins, but decide not to move them?