Almost this exact scenario happened to me a few months back, and they did the same, asking me to sign an agreement saying I knew what I did was wrong (it wasn't

Almost this exact scenario happened to me a few months back, and they did the same, asking me to sign an agreement saying I knew what I did was wrong (it wasn't) and that I wouldn't do it again. I absolutely refused to sign such a thing, and thankfully a friend of a friend knew someone in a high position at PayPal that finally got it all sorted out. Two weeks of extreme stress later, but at least it got worked out. Take unusual measures and if you are lucky you'll get it worked out.