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Becareful, I have seen this a lot over the years buying and selling domains, this guy is most likely full of shit and trying to take advantage of you using scare tactics to get a domain he wants.
If he really had any copyright stand point he wouldn't be offering you ANY money... If the $500 offer isn't anything to you, wait for the C&D letter before doing any transaction with this person, just make as much money as you can right now.
Goodluck
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