They are most certainly still holding them. They would actually have to take intentional steps to burn them, and that would be silly to do as they'd literally be throwing away money.
It seems that there is an assumption from Coinbase that BCC will be nearly worthless, so it isn't worth building the infra to handle both currencies. They can choose to make users BCC available if there is enough demand for it.
Here's what Coinbase themselves say about this:
> Coinbase does not intend to interact with the Bitcoin Cash blockchain, or to access bitcoin cash (BCC). In order to safely and securely access bitcoin cash, Coinbase would need to undertake a process of designing and testing significant changes to our systems — including hot and cold storage. This is one of the core reasons customers will not be able to withdraw bitcoin cash after the fork on August 1st, 2017.
> If this decision were to change in the future and we were to access bitcoin cash, we would distribute to customers bitcoin cash (BCC) associated with bitcoin (BTC) balances at the time of the fork on August 1st, 2017. Coinbase would not keep the bitcoin cash associated with customer bitcoin (BTC) balances for ourselves.
It seems that there is an assumption from Coinbase that BCC will be nearly worthless, so it isn't worth building the infra to handle both currencies. They can choose to make users BCC available if there is enough demand for it.
Here's what Coinbase themselves say about this:
> Coinbase does not intend to interact with the Bitcoin Cash blockchain, or to access bitcoin cash (BCC). In order to safely and securely access bitcoin cash, Coinbase would need to undertake a process of designing and testing significant changes to our systems — including hot and cold storage. This is one of the core reasons customers will not be able to withdraw bitcoin cash after the fork on August 1st, 2017.
> If this decision were to change in the future and we were to access bitcoin cash, we would distribute to customers bitcoin cash (BCC) associated with bitcoin (BTC) balances at the time of the fork on August 1st, 2017. Coinbase would not keep the bitcoin cash associated with customer bitcoin (BTC) balances for ourselves.