Re: Auction ? Why not just convert to £ ?
1) Converting a large amount of currency at once on the open market could depress the price massively, if there are temporarily more sellers than buyers. Better to sell it privately and then allow the buyer to sell it on the open market at a slow steady rate. The buyer can take the risk of any price changes.
(Disclaimer: I'm not sure what volumes of Bitcoin are being traded each day, so I'm not sure if this counts as a "large amount").
2) The rules for disposing of seized property probably say it has to be an open auction. And that's mostly a good thing, it prevents defrauding the taxpayer by selling it cheap to a mate, and it protects the police against allegations that they've sold it cheap to a mate.