The problem is Paypal will then put your account into a negative amount if it was found the card/account was stolen, then you loose your money and the phone. If you cash out and remove your bank details they will still do this but possibly call the debt collectors (for this sort of sum).
Moral of the story, never sell or buy anything over £50 on ebay (unless you are buying from a recognised store, or can afford to loose the money, or handling payment an delivery in person). It's terrible it's come to this but that is pretty much how bad some people and ebay themselves are.