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I know that the gem or 'mani' on Ashwatthama's forehead was taken away by Krishna, but what happened to the gem after that? Was it destroyed?

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Vyasa directed Aswatthama to give the gem to Yudhisthira.

The royal sage Yudhishthira never desires to win victory by perpetrating any sinful act. Give unto these that gem which is on thy head. Taking that, the Pandavas will in return grant thee thy life!"

Aswatthama hand overs the gem to Bhimasena, who in turn gives it to Draupadi.

Draupadi said,

"I desired to only pay off our debt for the injury we have sustained. The preceptor's son is worthy of my reverence as the preceptor himself. Let the king bind this gem on his head, O Bharata!"

The king then, taking that gem, placed it on his head, at the desire of Draupadi and regarding it as a gift from the preceptor. Holding on his head that excellent and celestial gem, the puissant king looked beautiful like a mountain with the moon above it

Mahabharata states this much about the gem.

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