There are a few local Bitcoin apps and sites. I don't think it would scale well for the FBI to have a sting on every Bitcoin to cash transaction, but would be good to have one on suspected Bitcoin wallets. Although most savvy cybercriminals at this point should be able to mix their dirty coins enough to avoid such a trap.
My guess would be that Microsoft tipped them off. I couldn't find in the compliant where the IRS or Secret Service got involved, but it does say that Microsoft Fraud Investigators discovered the fraud and fired him.