[giodamelio]

My understanding is this. The government found a bunch of bitcoins on a computer that may or may not have belonged to Ross Ulbricht, so they asked him "Are all these bitcoins yours?". Ross can't say that they are without admitting his guilt, so the government auctions them off.

[whyenot]

Your understanding is wrong. From the order:

WHEREAS, on or about December 12, 2013, Ulbricht filed a timely verified claim in this proceeding, asserting an ownership interest in the Computer Hardware Bitcoins

[desdiv]

To add to that, Ulbricht voluntarily agreed to this sale:

WHEREAS, the Government and Ulbricht agree that, due to the volatile market for bitcoins, the Computer Hardware Bitcoins risk losing value during the pendency of the forfeiture proceedings;

WHEREAS, the Government and Ulbricht agree that the Computer Hardware Bitcoins are to be liquidated or sold by the Government before the conclusion of the forfeiture proceedings, with the net proceeds of the sale to be held as substitute res pending further order of this Court;