Surely if Steemit never owned these STEEM, it would be unethical to cash them in to fund anything other than Steemit.

Yeah, without knowing what's going on, I can't have a strong opinion, but since those funds were "seized" in the name of "the community", one would certainly hope that they would be put to use in a way that benefits "the community".

There's an argument to be made that keeping the STEEM off the market by tying it up as USDD collateral and using it to generate a revenue stream for steemit.com would benefit the community, but I'd like to see some transparency on whatever is going on. (if that's what they're doing, as I speculated above)

OTOH, with the timing of the movement and now learning that Steemit has a response due on May 27, I'm wondering if this might be part of some sort of settlement agreement. We'll see.