Open Question: Whats the worst that can happen? Ebay problem?

So I sold this guy on eBay a disc for pretty high price. I had proof that it worked. (Made a video of it functioning and put it on Youtube and attached it to my eBay auction.) I posted that I WOULD NOT ACCEPT RETURNS as I knew for a fact that this item was in working condition. I sent it off and one week later this buyer demands a refund saying that it doesnt work and theres a giant crack in the disc and blah blah blah. So he sends back the disc regardless that I said I wouldn’t be accepting returns or refunding. He then goes on to leave me negative feedback before I even had a chance to respond. I open the returned package and see a giant crack that I HAVE NEVER SEEN IN MY LIFE. I’m afraid he might have switched the discs, but the disc definitely did not read, and I am actually VERY reluctant to offer him a refund because of his poor quality and service. I haven’t had contact with him in a few days so I hope he isn’t planning anything or he just forgot about the matter. Can he sue me? I live in California and him in Tennessee. Whats the worse that can happen? He either swapped the disc or broke it himself. I packed the disc in 2 separate cases with packing peanuts in a cardboard box so there is no way that the packing was my problem. What should I do? Should I just shrug it off? I have negative feedback and a broken disc. This is one of the worst eBay experiences I have ever had. I’ve only sold around 15-20 things so I’m not that experienced, but please someone help me out. What will happen if I don’t refund him? Thanks.