It's mostly Nixon's fault. Back in the early 70s crime was rising and people were scared and they wanted to hear about how politicians were doing something. Murders were really a matter for local law enforcement rather than the Feds so Nixon came up with the politically brilliant idea of blaming crime on drug use, announcing a war on drugs, and creating new tools such as this sort of seizure of money.

There was a big expansion of this in 1984 pushed by Biden that more or less gave us the modern form of asset forfeiture.

And we're going to have to solve this problem at the Federal level. Many states have laws preventing police from keeping the money they seize. But the DEA is happy to take credit for the seizure, keep n% of the money, and hand the rest back to the department that did the seizing.