This has happened to me several times. One time from an old guildy who gquit. The GM is a bit of a moron and said over vent "Stop checking your bots and log on FFS" he caught on and well you can play out the rest of the story in your head. I ignored him played by hand for a few weeks to make sure "Toon wasnt even on my mains account anyways."
I would say ignore it play by hand for a week if he emails u again asking for money threaten to report him for black mail and tell him your no god damn chinese farmer. "Sorry for anyone whos chinese but this shit usualy makes people back off."
Both of you have to RISK being banned or suspended for reporting eachother so neither of u are likely to do anything is the best scenario for both of you.
Just my opinion.