If you didn’t send it to the registered paypal address you aren’t covered by their pretty worthless seller protection.
If you don’t want to swallow that then cancel all of the cards etc on your paypal account and let them send it to the collection agency, when they ring tell them the transaction is in dispute and you aren’t paying anything.
Paypal will then close your account. I don’t condone doing this, I was stupid enough to let someone pick something up after paying by paypal and got stitched up for £450, I did the above as there was no way I was loosing that much.