Well let me say, I don't do well with negative drama and certainly someone who is threatening me. I would probably be the first to let the dude know that I'm not subject to extortion or threats for money. But I'm not you or don't know your situation.
I do think this kind of experience should be discussed. There are always two sides to a disagreement, but providing facts, like a written conversation) is helpful in proving your point. I'd certainly go to the police before I'd ever "cave" to any sort of blackmail. I just think it is unfortunate that these kinds of experiences happen.