Well I'm assuming it was a hacked/stolen/whatever paypal account, but either way, he used unauthorized/illegal funds to pay..
"It has come to our attention that you may be the recipient of potentially
unauthorised funds. We have initiated an investigation into this event. In the
meantime, we have placed a temporary hold on the funds in question until the
investigation is complete. This temporary hold will show as a deduction in your
available balance. In the meantime, you are free to continue transacting using
your PayPal account."
When I asked him about it, he simply blocked me, so, yeah.