Buyer is trying to scam me, reporting his own payment as fraudulent

[Netherspark]

I sold a download code for a video game on ebay, and sent it to him in an email.  Immediately after I sent it he reported his own payment as fraudulent and is trying to reverse the payment.  He also closed his ebay account.

Paypal has put the money "on hold" and is asking me to respond by either refunding him or provide proof that I sent the item through an "approved postal service".

What can I do in this situation?  He is blatantly commiting fraud here, is there someone at Paypal I can report this to?  And what are the chances I can stop this?

[Kenlar]

Digital services are not protected. Contact the game company get them to void that user account.

[Netherspark]

For future reference, would sending the code physically by mail make me eligible for seller protection?

How would this situation be handled then,  if he still filed a claim after recieving the code by post?