Man, that sucks. Not only for the victim of the extortion, for losing such a username that he obviously liked, but for everyone, because with such ruses being widely employed, it's going to make it more difficult for legitimate people to recover accounts from online services. It's already damned difficult enough for most folks to follow through the steps. There's always something they don't have or don't get.
His life was basically in that creep's hands. It's a good thing the thief wasn't unnecessarily cruel.