Won domain in recent Sedo auction, made payment, transaction cancelled 4 days later.

Got this message from Sedo while waiting for domain transfer:

Transaction cancelled by Sedo​

As the seller is not or no longer the owner of this domain, he is not authorized to sell it.
Sedo will therefore not proceed with the transaction at this point.

You might want to take a legal action against the seller, therefore we have made his contact data available in your Sedo contract.

The suspension of the transfer in no way affects the Purchase & Sales Agreement between the seller and the buyer. In case you and the seller agree to continue the transaction, Sedo may proceed with the transfer.

Seller
Aaron Oxborrow
xxxxxxxx
El Cerrito, US xxxxx
United States

How does this happen??? Does Sedo not check ownership prior to listing domains in premium auctions? Did this seller really list a domain he no longer owns in error or was he just not happy with the winning bid?