most of them are just electronic and don't really exist. We need a new debt free money. (check out the documentary "The Secret of Oz" on youtube if you don't know what I mean.)
But, to answer your question, my understanding is that when money is confiscated it sits in a locker in a police station as evidence. I doubt these billionaires have physical cash. It's digits in a bank account. There will be only a paper trail for legal proceedings not loads of cash.
The money might be used to pay debts or just goes to the state. Not quite sure. We still need government to catch bad guys. The states still need income for taking care of necessities for the taxpayers (in theory, right?). Sorry, but I really don't see how taking stolen money from crooks is a bad thing. If we ever get to the point of rooting out the most evil of bad guys, we'll hopefully have flushed out the corruption at lower levels too.