My understanding was that a judge was to prosecute a case concerning an Asian Aro in the U.S. and told the feds he would only do so if the fish was presented in court alive. The fish was sent to a tropical fish wholesaler for care until the trial when it was brought in as evidence. After that its fate was unknown.
I can tell tell you that CITES (including CITES appendix 1) plants confiscated several years ago were sent to a botanic garden. Such gardens are designated as rescue stations, the plant material is considered saved for the public good and such rescue is not uncommon, with orchids, cacti, cycads, etc. being smuggled. I believe the original material could not be sold or traded, however cuttings made from the plants could be. Cutting could NOT, however be given to any of the parties involved in the illegal importation, and the parties were made known to the garden.
While CITES plants and animals are treated differently (since plants can generally be cloned through cuttings, or mass produced by seed), it seems that confiscated fish could be giving to a public aquarium, and that they could be bred. The legality, or lack thereof, of the offspring would be an interesting question if the feds allowed them in the country as rescued animals, but then perhaps they would only allow them to be distributed among other public aquaria. Destroying confiscated fish, especially endangered ones, seems dumb, as does preventing commercially raised fish from entering the U.S. if permits and proof of captive breeding are verifiable.